







INTRODUCTION 

Said the Judge: 

“In this, as in most cases, the difficulty lies not in the principles of law, but 
in the analysis of the facts.” 85 N. J. L. 416 (1918). 

And so it is in business. Business men deal primarily with facts. Trans¬ 
actions are couched in conversations, correspondence, telegrams, custom and 
usages of trade as well as in formal contracts. The entire series of communica¬ 
tions, practices, and agreements constitutes the narrative of facts. 

The power to analyze facts and draw correct conclusions therefrom con¬ 
tributes largely to success in any vocation, profession or calling. The extent and 
ease with which one comprehends situations, analyzes the facts, and draws correct 
inferences are known as “mental caliber.” Mental caliber may be developed 
through practice. 

The purpose of the problems and questions herein contained is to give the 
student practice in analyzing situations and applying the rules of law learned 
from the instructor and the textbook. 

The Author. 


COPYRIGHT 1924 BY THE 
GREGG PUBLISHING COMPANY 
: : : is6-P-s : : : 



\Vf 

,W 4- 

y .‘^-PROBLEMS and questions in commercial law 

CONTRACTS 


Infants 

I. 

Touissant Tourville died in the year 1833, owning certain land. He left 
eight children surviving him, who, of course, inherited the land. Paschall and 
Catherine, two of said children, by deeds dated respectively April 1, 1834, and 
April 10, 1834, conveyed their shares (two-eighths) to Pierre and Charles Tour¬ 
ville. Pierre and Charles conveyed to someone else, and various conveyances 
’ were made until one Laik finally received a deed to the land. 

Sixteen years later, (1850), Paschall, being then of age, gave another deed 
to the same land to which he gave a deed on April 1, 1834. As a result of the 
second deed of Paschall, a conveyance was eventually made to one Mrs. Peterson. 
Catherine, twenty years after her deed of April 10, 1834, in the year 1854, having 
attained her majority, gave a deed to the same land to the said Mrs. Peterson. 

There are now, therefore, two people who claim title to the same land— 
Mr. Laik and Mrs. Peterson. 


Answer the following questions: 

(1) What is the general rule as to the validity of the contracts of an infant? 


(2) Who is entitled to the land in question? Give the legal reason. 














i Contracts 


PROBLEMS AND QUESTIONS 


2 . 

Robert Voorhees was an orphan under age, living with his mother. While 
yet a minor, he contracted with one John Wait, to work with him, for certain 
wages, and be instructed in a trade, till the age of twenty-one, if the parties 
should so long agree. Under this agreement, he worked for Mr. Wait some 
time, and then left him. Mr. Wait refused to pay him the stipulated wages, 
and after Robert became of full age, he sued Mr. Wait for his wages. Mr. 
Wait defended on the ground that the contract, having been made when Robert 
was under age, was voidable. 

Question :—Is Robert entitled to recover? Give legal reason. 


3 - 

Martin C. Johnson was born in the year 1871. On October 25, 1888, he 
bought an insurance policy on his own life in the sum of $1,000 (a twenty-year 
endowment policy), paid $13.19 as premium on that date, and agreed to pay a 
like sum every six months thereafter. He paid seven of these semi-annual 
installments, in all $1 86.32 ($23.29 + (7 x $23.29). On December 19, 1892, 
immediately after he became of age, he served written notice on the Insurance 
Company that he elected to avoid the policy and offered to return it and 
demanded a return of the money he had paid. 

Answer the following questions , giving the legal reason in each instance: 

(1) Is Martin entitled to recover? 


(2) If Martin had died before disaffirming the policy, would the Insurance 
Company have been bound to pay the face value of the policy to the beneficiary? 











IN COMMERCIAL LAW 


Contracts 3 


Necessaries 

4 - 

John S. Foote, aged fifteen, an orphan, owned an estate valued at $60,000.00. 
John was sent to a school in New Haven, Conn., and placed in care of the school 
teacher. His guardian visited him once a month and paid his bills. 

During the time John was at school he became afflicted with toothache, 
and went alone to the office of a dentist to have it cured. The dentist knew John 
and his relatives, and knew that the boy had considerable property. 

The dentist examined John’s teeth, and discovered that they were in bad 
condition, very much neglected and decayed. The dentist told him this, and at 
his request proceeded to clean and fill the teeth at an expense of $93.00, leaving 
them in good order. All the work done was necessary to the preservation of the 
teeth, and the charge therefor was considered reasonable in amount. 

Answer the following questions: 

(1) Define necessaries. 


(2) Is John’s estate chargeable for the bill of the dentist ($93.00) as for 
necessaries ? Give reason. 


5 . 

Lee, 19 years of age, was a student at Yale college. He engaged rooms of 
Gregory for the school term of 40 weeks at $10 per week. He occupied the rooms 
about three months and then engaged rooms elsewhere. Gregory was unable 
to rent the rooms for the remainder of the term. He brought suit against Lee 
to recover for 40 weeks at $10 per week, according to contract. 

How much, if anything, is Gregory entitled to recover? Reason? 











4 Contracts 


PROBLEMS AND QUESTIONS 


6 . 

Edward C. Lardner was twenty years of age, owned a city lot, and was 

engaged to be married to Ida M., who was also of the age of twenty 

years. 

In contemplation of the marriage, and for a home for his wife and himself 
after such marriage, Edward entered into a contract with some building con¬ 
tractors to build a house on said lot for the consideration of $887. Edward fur¬ 
nished part of the materials and labor, the contractors supplied the remainder of 
the materials and labor and built the house. The house was worth the contract 
price, and was a suitable one for the home of the young couple. 

Edward and Ida were married December 7, 1891, moved into and occupied 
the house, and on January 4, 1892, gave the contractors a bond secured by a 
mortgage on the property for the amount that Edward owed the contractors. 

On April 28, 1892, Ida attained her legal majority (21 years), and on Novem¬ 
ber 8, 1892, Edward became of age. 

Upon becoming of age, Edward immediately disaffirmed the bond and mort¬ 
gage, and refused payment on the ground that he and Ida were infants when they 
executed the bond and mortgage. 

Answer the following questions , giving legal reasons: 

(1) Are Edward and Ida liable upon the bond and mortgage? 


(2) Is Edward liable as for necessaries ? 














IN COMMERCIAL LAW 


Contracts 5 


(3) What restoration must they make to the contractors? 


7 * 

One Mr. Gay married one Mrs. Ballou, a widow, in December, 1819. By the 
marriage of her first husband, Mrs. Gay had a son, Charles, let us say, who, at the 
time of her second marriage, was 17 years of age. Upon the marriage of his 
mother to Mr. Gay, Charles ensconced himself in the home of his stepfather, and 
enjoyed all the comforts thereof. It seems that Mrs. Gay died in April, 1823, 
and soon thereafter, May 1, Charles left the home of Mr. Gay. 

Mr. Gay submitted a bill, claiming “$346 for boarding, lodging, washing 
and mending furnished Charles from January 4, 1820, until May 1, 1823, being 
173 weeks at $2 per week, and $45.38 consisting of sundry items paid for defend¬ 
ant (Charles) to schoolmasters, merchants, physicians, tailors and shoemakers.” 
There was no evidence, neither was it affirmed, that Charles ever made any 
promise to Mr. Gay to pay him. Howevef, it was proved that he had said he 
was willing to settle with Mr. Gay and “pay him what he owed him, if anything.” 
Also, the payments by Mr. Gay were made upon the request of Charles. 

Question: 

Is Charles liable to Mr. Gay as for necessaries furnished? Give reasons. 


Note. “An infant is not liable for necessaries when he lives under the roof 
of his father, who provides everything which seems proper, and so when he is 
supplied by a guardian or widowed mother. The parent or legal protector hav¬ 
ing the means and being willing to furnish all that is necessary, the infant can 
make no binding contract.” 











6 Contracts 


PROBLEMS AND QUESTIONS 


8 . 

What must a merchant allege and prove in order to recover from an infant 
as for necessaries? 


Appointment of an Agent 
9 - 

William H. Posten, an infant, was the owner of a certain horse, which he 
desired to exchange for another, and for the purpose of making such exchange he 
entered into an agreement with one Mr. Williams whereby and under which 
agreement Mr. Williams exchanged the animal belonging to Posten to a third 
party for a certain black horse and a gray filly. Mr. Williams paid to the third 
party $15.00 difference in making the exchange. 

Mr. Williams surrendered the black horse to Posten, but kept the filly. 
Later, when Posten learned for the first time that Mr. Williams had also obtained 
in the exchange the gray filly he tendered to Mr. Williams $15.00 in money and 
demanded the animal. Mr. Williams refused to accept the money tendered or 
to surrender the filly. 

Answer the following questions: 

(1) What is the rule with regard to the validity of the appointment of an 
agent by an infant? 


(2) Is William Posten entitled to recover the gray filly from Mr. Williams? 
Give legal reason. 
















IN COMMERCIAL LAW 


Contracts 7 


Wrongful Act 
10. 

On a certain 4th of July, one Mr. Conklin was “peaceably and lawfully” 
driving a horse of his, attached to a wagon, through the streets of Poughkeepsie; 
and while so driving through said streets, one Thompson, a minor, “designedly 
and intentionally and willfully threw a lighted fire cracker” under Mr. Conklin’s 
horse. The fire cracker exploded under the horse, “and so frightened him by 
said explosion that in consequence thereof he died immediately.” Mr. Conklin 
valued the horse at $ 100.00; the jury, before whom the case was tried, valued the 
horse at $ 60.00. 

Question: —What, if anything, is Mr. Conklin entitled to recover from the 
minor, Thompson? Give reason. 


Insanity 

11. 

Thomas Ronan owned a city lot in Chicago. He conveyed this property 
to one Thomas Carbine, who, on the following day, conveyed it to his daughter. 
Two days thereafter, Mary Ronan, daughter of Thomas Ronan, filed a petition 
in the County Court alleging that Thomas Ronan was and had been for over two 
years a confirmed drunkard and of unsound mind. 

Ronan was judicially declared to be insane or non compos mentis , and his 
daughter, Mary, was appointed conservatrix. As such conservatrix, she now 
asks that the deeds of conveyance be set aside and that her father be restored 
to the ownership of the lot. She did not offer to return the consideration received 
by her father, Thomas Ronan. 

Assume the following facts to be true: That Carbine did not know of 
Ronan’s insanity; that Carbine paid a fair price for the land and took no advan¬ 
tage of Ronan. 











8 Contracts PROBLEMS AND QUESTIONS 

Question: —(i) Will the deeds be set aside and the ownership restored to 
Ronan? State the rule that applies. 


(2) After a person has been judicially declared to be insane, are his contracts 
valid, void or voidable? 


Agreement—Offer 
12. 

The State of Illinois was the owner of the Quincy House property, in Quincy, 
Adams county. An act authorizing the sale of this property was passed by the 
legislature February 12, 1849. The Governor was directed to sell, for state 
indebtedness, to the highest and best bidder , after advertising, etc., all the details 
being specified, in accordance with which the following bids were submitted: 


Bidder Amount of Bid 

Jacob Bunn. $15,250 

E. A. Thompson. 17,000 

McFadden, Webster & Powers. 17,000 

C. A. Warren. 17,250 

Webster and Huntington. 21,100 


Among the bids were found the following propositions: 

“We, the undersigned, propose to pay the State of Illinois five hundred 
dollars more than any bid made for the Quincy House property, up to 10 o’clock 
A. M., 2d July, 1849. 


“Henry Root & Co.” 

















IN COMMERCIAL LAW 


Contracts 9 


“We, the undersigned, propose to give for the said Quincy House and prop¬ 
erty, the sum of six hundred and one dollars over and above the highest bid 
of the highest responsible bidder for said house and property, made according 
to the advertisement of the Governor. 

“Ash and Diller” 

The bid of Webster and Huntington being the highest specific amount, the 
Governor added thereto the $500 excess proposed to be given by Root & Co., 
making $21,600, and to this aggregate sum added $601, the excess proposed to 
be given by Ash and Diller, making a total of $22,201. And, at this sum awarded 
the property to Ash & Diller. 

Answer the following questions: 

(1) What are the requirements of a good offer? 


(2) Are Ash and Diller entitled to the property? Give reason. 


(3) When does an offer become operative? 


13 - 

One George Sherman promised Elizabeth Koons “one hundred acres of 
land,” in consideration that she should live with him, as his housekeeper, until 
her marriage. She “did well and faithfully keep his house” until the time of 













IO Contracts PROBLEMS AND QUESTIONS 

her marriage, and now seeks to compel the conveyance of one hundred acres of 
land to her. 

On these facts, has she a good case? Give reason. 


14. 

A sheriff’s sale of certain property of a debtor was directed for the purpose 
of satisfying the execution of a creditor, one P. C. Sedgwick. Mr. Sedgwick 
submitted a bid for himself in the following written form: 

“To Samuel Faunce, Esq., 

Sheriff of Dauphin County. 

“Sir: For the press and materials of the Pennsylvania Intelligencer, as 
now offered for sale, I hereby offer to bid the sum of eleven hundred and fifty; 
the money to be applied on my executions , and the costs on the same now in your 
hands , standing against Elliott & McCurdy; and if you do not strike down the 
same to me, on these terms , but sell for a less sum, I shall hold you personally 
liable for the loss I may sustain thereby. “P. C. Sedgwick.” 

This paper Mr. Sedgwick handed to the sheriff. It was specific, and super¬ 
seded all other bids for the property. It was decidedly the highest bid. 

Question: —Is the sheriff bound to accept the bid and strike the property 
down to Mr. Sedgwick? Give reason. 













IN COMMERCIAL LAW 


Contracts 11 


15 - 


“New York, May 15th, 1875 

“For value received, the bearer may call on the undersigned for 
one hundred (100) shares of the capital stock of the Western Union 
Telegraph Company, at seventy-seven and one-half (77^) per cent, any 
time in thirty (30) days from date. 

“Or the bearer may, at his option, deliver the same to the under¬ 
signed at seventy-seven and one-half (77 }4) per cent, any time within 
the period named, one day’s notice required. 

“All dividends or extra dividends declared during the time are to go 
with the stock in either case, and this instrument is to be surrendered 
upon the stock being either called or delivered. 

“S. N. Salomon.” 


Questions: —(1) Give legal reasons for approving or disapproving the above 
instrument. 


(2) If it should be shown that neither party intended to deliver or accept 
the shares, but merely to pay the differences according to the rise or fall of the 
market, what would be the status of the instrument? 















1 1 Contracts 


PROBLEMS AND QUESTIONS 


Agreement—Acceptance 

16. 

On the 30th day of December, 1903, Moses Levy, a citizen of Henderson 
County, Ky., made written application to the New York Life Insurance Company 
for $10,000 of insurance on his life, to be written in two policies of $5,000 each. 
On January 20th, about noon, Mr. Levy paid the first premium to the agent 
under an agreement that he was to stand insured as of the date of the applica¬ 
tion. That same day, at about 11145 p. m., Mr. Levy suddenly died. The day 
before (19th of January) the company had, at its general office, considered the 
application and rejected it for $10,000, but approved it for $5,000 and issued a 
policy therefor, which was sent to the agent, who delivered it to the decedent’s 
son. 

Questions: —(1) What are the requirements for an acceptance in order that 
it conclude the negotiations into a binding contract? 


(2) In case the offeror does not specify any mode for communicating the 
acceptance, what mode is presumed to be the proper one? 


(3) In case a letter or telegram is the proper mode, when does the acceptance 
become effective? 















IN COMMERCIAL LAW 


Contracts 13 


(4) In case a mode is used other than that prescribed by the offeror, or, in 
case none be prescribed, a mode is used other than the one used by the offeror, 
when does the acceptance become effective? 


(5) When may an offeror withdraw his offer? 


(6) When does a withdrawal become effective? 


(7) In the above case, for how much was Mr. Levy insured at the time 
of his death ? Give reasons. 


17 * 

A wired an offer to sell oil to B. The telegram was sent at 9 a. m. and re¬ 
ceived by B in due course at 11:15 a. m. B wired his acceptance at 12:45 P- m * 
and it reached A in due course at 4:15 p. m. At 1 p. m. of the same day A had 
wired a revocation of his offer, which reached B at 3 p. m. When, if at all, was a 
contract completed in this case? 
















14 Contracts 


PROBLEMS AND QUESTIONS 


18. 

A Rolling Mill Company received the following letter from a Railway Com¬ 
pany: 

“December 8, 1879. 

“Gentlemen: 

“Please quote me prices for 500 to 3,000 tons 50-pound steel rails, and for 
2,000 to 5,000 tons 50-pound iron rails, March, 1880, delivery. 

“Yours truly 


To which the Mill replied by letter as follows: 

“Your favor of the 5th inst. at hand. We do not make steel rails. For 
iron rails, we will sell 2,000 to 5,000 tons of 50-pound rails for fifty-four ($54.00) 
dollars per gross ton for spot cash, f. o. b. cars at our mill, March delivery.” 

On December 16, 1879, the railway company telegraphed the mill company: 

“Please enter our order for twelve hundred tons rails, March delivery, as 
per your favor of the 8th. Please reply.” 

To which the Mill replied by telegram: 

“We cannot book your order at present at that price.” 

The railway company immediately, upon receipt of the reply of the Mill, 
sent another telegram: 

“Please enter an order for two thousand tons rails, as per your letter of the 
eighth. Please forward written contract. Reply.” 

But the Mill declined to enter the order or to have anything more to do 
with the matter. 

Did the negotiations result in a contract? If so, for how many tons of 
rails? Give reasons. 


Mistake 

19. 

“Boston, July 2, 1868. 

“I hereby agree to sell to E. Kavanagh four lots of land in Waltham on 
Prospect Street, so called, for 50 shares of Mitchell Granite stock, 9,000 shares 









IN COMMERCIAL LAW 


Contracts 15 

of Revenue Gold stock, also $150 in lawful money for said land. Said Kyle is to 
give said Kavanagh a good title, if the title is in said Kyle, so he can give deed; 
if said Kyle cannot give a good title, then this agreement is null and void. 

“Winslow S. Kyle.” 

When the deed was made out and tendered to Mr. Kavanagh, he refused to 
accept it or to pay for the land. He presented evidence tending to show that the 
land conveyed by the deed was not the land that he thought he bargained for 
and that what he had agreed to purchase was a lot of land on another Prospect 
Street in Waltham, in no way connected with that mentioned in the deed, and a 
long way off. 

Assuming that he introduces evidence sufficient to prove his contention, 
can Mr. Kavanagh be compelled to accept the deed and pay for the land con¬ 
veyed to him? Give reason. 


20. 

Elisha Harris died in July, 1858. His wife had died some four or five years 
before him. After her decease he resided entirely secluded and alone. In August 
after his death, an inventory of his effects was taken by his administrators, and 
a sale made of them the same month. In an unfinished room of his house, among 
rubbish, was found a square block of pine wood about three feet long and ten or 
twelve inches square, hewn, supported by four legs, about a foot and a half in 
length. On the top was a horizontal wheel with a perpendicular iron spindle, 
some kind of unfinished machinery apparently, but not in condition for use. 

This article was handed over by the administrator to the crier of the sale. 
Some two or three bids were made, and it was struck down to one David M. 
Huthmacher for fifteen cents, and delivered to him. 

Huthmacher paid his bill (fifteeri cents) and took his property home with 
him. On examining his purchase, he concluded it to be of little value, and took 
his axe and split the block open, when the following articles, concealed in a 
hidden drawer, were exposed: 

Sundry promissory notes, 

Bank notes. 

Two silver watches, and 

A pocket compass. 


Total value of which was $3,754.5°. 







16 Contracts PROBLEMS AND QUESTIONS 

Who was entitled to this treasure, Huthmacher or the administrators of 
Elisha Harris ? Give reasons. 


21 . 

Wood found a small uncut diamond worth $700 to $ 1,000. Thinking it was 
a topaz she sold it for $1 to Boynton, who also thought it was a topaz and was 
ignorant of its true character. When Wood discovered that the stone was in 
fact a diamond she tendered back the $1 with interest and demanded possession. 

Was the sale good? Reason. 


Fraud 

22. 

John A. Heckler owned land in the city of Pittsburgh of the estimated value 
$13,500.00. William Holmes owned 240 acres of farm land in Allen county, 
Indiana, valued at $ 12,000.00. Holmes and Heckler entered into an agreement 
to exchange the properties, and a difference of $ 1,500.00 was to be paid by 
Holmes. 

Mr. Heckler testified that during the negotiations he and Mrs. Heckler went 
to look over the Indiana farm and that his wife said if there was any fever and 
ague there she would not go out. Whereupon, Holmes said there was no fever 
and ague there at all. When they rode out to the farm, Mrs. Heckler remarked: 














IN COMMERCIAL LAW Contracts 17 

“It must be sickly here.” To which Mr. Holmes replied: “There is no fever 
and ague here at all.” This testimony was not contradicted. 

Mr. Holmes was put on the witness stand and at first testified that fever and 
ague did not prevail there, that the location was as healthy as any other part of 
the state. However, on cross-examination he said: “ I have known fever and ague 
in that neighborhood. I know there have been such things; I have had it in my 
own family, but very little, on the farm near the Heckler farm.” 

Other evidence was introduced tending to show that fever and ague were 
prevalent there. 

(1) What are the elements of legal fraud? 


(2) May Mr. Holmes enforce his contract with Mr. Heckler to exchange 
properties? Give reasons. If you think he can not on account of fraud, show 
how the elements of legal fraud are applicable to the facts of the case. 


















18 Contracts 


PROBLEMS AND QUESTIONS 


23 ‘ 

On the 19th of one January, Charles F. Smith applied for insurance upon the 
life of his father, J. C. Smith. The policy was issued February 11, and the insured 
died May 11, same year. 

Some of the questions and answers on the application were as follows: 

Question:—“Has the party ever had any of the following diseases?” (Some 
twenty were named, among which were asthma, disease of the heart, palpitation 
and spitting of blood.) 

Answer:—“See surgeon’s report.” 

The surgeon’s report, made out by the Insurance Company’s examining 
physician, who had never attended the deceased and knew nothing upon the 
subject of the ailments of the deceased, answered the above question, “No.” 

Question:—“Name and residence of the family physician of the party or of 
one whom the party has usually employed or consulted?” 

Answer:—“Has no physician.” 

Question:—“Has the party, or has he had, an habitual cough?” 

Answer:—“No.” 

The facts were that the deceased had been troubled with heart disease and 
spitting of blood for months prior to the application, and that also he had a 
regular physician. 

What is your opinion as to the validity of the insurance policy? Give 
reasons. 


24. 

A, knowing that there is a mine in the land of B of which he knows B is 
ignorant, contracted with B for the purchase of the land at a price that was 
merely the value of the land without the mine. 











IN COMMERCIAL LAW 


Contracts 19 


(1) What is the gist of fraud by concealment? 


(2) Where the subject-matter of a sale has a latent defect that the buyer 
could not discover by the exercise of reasonable care, is there a duty upon the 
seller to tell the buyer of the defect? 


(3) Is the contract between A and B, above, valid? Reason? 


25 - 

Mr. Gordon desired to borrow $10,000 from Mr. Butler, and offered by way 
of security a mortgage upon his real estate containing sandstone quarries, which 
had not been sufficiently worked to show their extent and value. In order to 
convince Mr. Butler that the security was adequate and induce him to make 
the loan, Mr. Gordon submitted the following written statement from two men 
who resided not far from the land in question: 

“Each of the undersigned hereby certifies that he is and has been for more 
than twenty years last past a resident of Potsdam, St. Lawrence Co., New York, 
and acquainted with the sandstone quarries south of Potsdam village; that he is 
acquainted with the quarry lots there owned by S. B. Gordon, and situate on 
the westerly shore of Racket River; that said lots are roughly represented on the 















20 Contracts 


PROBLEMS AND QUESTIONS 


annexed diagram; have on them the buildings, and in his best judgment contain 
the quantity of land, and are worth the sums severally below cited, to wit: 


“No. 1—Falls Lot. 

.about 8 acres, 

worth 

$8,000 

“ 2—Orchard Lot. 

<< 

4 

a 

if 

5,000 

“ 3—Cox Lot. 

a 

16 

a 

if 

8,000 

“ 4—Hickes Lot. 

a 

!5 

a 

if 

5,000 

“ 5—Mecham Lot, house and barn.. 

a 

7 

a 

if 

5,000 

“ 6—Hale Lot. 

a 

10 

it 

t( 

1,000 

“ 7—Parmeter Lot, 2 houses and barns.. 

if 

U 

a 

if 

8,000 

“ 8—Train Lot.. 

a 

26 

if 

a 

8,000 

Total 8 Lots. 


103 acres 

<C 

$48,000 

Dated Potsdam, Dec. 12, 1872. 







<< 

[ H. Watkins. 



“E. W. Foster.” 

Mr. Gordon defaulted upon the loan, and upon foreclosure sale the entire 
property listed above was struck down at $1,500.00, the highest bid. 

Question :—Was the element of legal fraud present in the negotiations for 
the loan by Mr. Gordon ? Give reasons. 


Duress 

26. 

One Mr. Nightingale had been treasurer of the Milwaukee Furniture 
Company. He bought shares of the company’s capital stock for which he owed 
the sum of $43,000.00. His reasons for not meeting his obligations are not 
disclosed. 

But a Mr. Morrill, one of the men to whom he was indebted, procured to be 
issued a warrant for the arrest of Mr. Nightingale upon the claim that he had 
embezzled large sums of money from the Furniture Company while he was 
serving in the capacity of treasurer. The warrant of arrest was procured for the 
sole purpose of frightening and intimidating Mr. Nightingale into signing a 
contract and four promissory notes aggregating the sum that he owed, $43,000.00. 

Mr. Nightingale believed that the warrant would be served and that he 
would be dragged through a nasty mess in defending himself in court. In order 





















IN COMMERCIAL LAW 


Contracts 2 1 


to avoid this and save his reputation, he signed the contract and the four promis¬ 
sory notes. 

Questions: 

(1) Define duress. 


(2) May Mr. Morrill collect on the contract and notes? Give reason. 


(3) So far as the validity of the contract and notes is concerned, would it 
matter whether or not Mr. Nightingale was actually guilty of embezzlement? 


(4) What kinds of arrest or threats of arrest constitute duress ? 




















11 Contracts 


PROBLEMS AND QUESTIONS 


27. 


“ Knoxville, Tennessee, June 11, 1870. One year after date I promise 
to pay to the order of Charles Seymour, with interest at the rate of ten 
per cent, one hundred and ninety-six and 15-100 dollars at said Seymour’s 
office in Knoxville, Tenn., value received. (Signed) J. D. Prescott.” 


Mr. Prescott was a resident of Maine, seventy-one years of age, did not 
enjoy perfectly good health, and was in Knoxville, Tennessee, as agent for his 
son for the purpose of effecting the sale of certain real estate. It seems that Mr. 
Prescott’s son had had dealings with one Charles Seymour, whereby Mr. Seymour 
had a claim against the son for the amount of the above note. 

Mr. Prescott, having finished his own business with Mr. Seymour, was 
preparing to return to Maine. The circumstances under which he signed the 
note he related as follows: 

“I knew about what time the cars started, . . . and as the time was 
expiring and I thought I ought to be there, Mr. Seymour came into the house 
with an inkstand and a pen and some papers in his hand and requested me to 
execute the note on my son’s account. I said to Seymour, ‘The cars are about to 
leave, Mr. Holt has already gone up. I can’t stop a minute to see to this matter.’ 
Said he, ‘You can’t leave the place until you sign this note,’ holding it up to me. 
Well, I felt for a moment as if my life depended on going home'at that time with 
Mr. Holt. So great was my terror that I seized the pen and signed the note, 
and immediately made my way to the depot. He held the note and this paper in 
his hand.” 

Question :—Was the signature on the note procured through duress? Give 
reason. 











IN COMMERCIAL LAW 


Contracts 23 


28. 

One Herrin was charged with having committed an assault and battery 
upon the person of one Eddy. Eddy procured a warrant for Herrin’s arrest, to 
answer to the charge. This he had a right to do; and if Herrin had been thereupon 
arrested, the imprisonment, or restraint of his person, would have been lawful. 

Herrin was not actually arrested, but the officer who called upon him with 
the warrant gave him to understand that he would formally arrest him unless he 
effected a settlement. Whereupon, Herrin gave Eddy a six months’ note for 
$13.00, which Eddy accepted in full settlement. 

Question :—Was the note procured through duress? Give reason. 


29. 

Talmadge E. Spaids was a dealer in oysters, doing a large and lucrative 
business, and was indebted to Oliver W. Barrett and others in the sum of $1,000 
for transportation, etc., which he was able and willing to pay. According to his 
story, Barrett was procured to make an affidavit that he (Spaids) was indebted to 
the express company in the sum of $2,996.30, for transportation, etc., and that 
he had fraudulently conveyed and assigned his property to defeat his creditors, 
etc., etc. Whereupon, Barrett and the others obtained a writ of attachment, and 
procured the levy thereof upon $5,000 worth of oysters, which they refused to 
deliver to Spaids until he should pay the said amount of $2,996.30 and sign a 
general release relinquishing all claims against them for damage to the property 
while in their possession. 

It seems that all the material allegations in the affidavit were false; Spaids 
owed no such amount; he had not fraudulently conveyed any property. It was 
shown that the purpose of the whole scheme was to injure him and to extort from 
him a large sum of moneny. 

Spaids, under protest, and to save his property from utter ruin, paid the 
amount demanded and signed the release, not knowing that the oysters had 
sustained serious injury. 

Question :—May Spaids recover the money paid and avoid the release? Give 
legal reasons. 









24 Contracts 


PROBLEMS AND QUESTIONS 


Undue Influence 
30 . 

One Mr. Buchholz married a widow who had several children, the eldest of 
whom was nine years of age. The mother had considerable land that had been 
willed to her for life by her former husband. Upon her marriage to Mr. Buchholz, 
he occupied the land and made valuable improvements thereon. 

Subsequently, the mother died, and, in accordance with the will of her first 
husband, the land went to the children of her first marriage. Upon the death of 
the mother, Mr. Buchholz was appointed guardian of his step-children. As they 
became of age, he secured from them a bond obligating themselves to convey to 
him their several shares of the land for the consideration of $500 to be paid to 
each, for which he executed his promissory notes payable at a future day, without 
interest. 

They are now suing to have these contracts set aside and to recover $1,790.00 
for the rent of the land since they arrived at their majority. 

The relationship between the parties and material circumstances of the 
situation was described by the court as follows: 

“From their earliest childhood the plaintiffs were subject to the authority 
of defendant.... The evidence shows that, while he was not unkind towards 
plaintiffs, he exerted his authority over them with a firm hand. They were 
unusually obedient, and entertained the respect for him due a parent. The 
evidence clearly shows that the contracts were executed at his solicitation, and 
upon requests that, in effect, were commands. The plaintiffs, at the time of the 
execution of the instruments, were not of ordinary intelligence—certainly had 
not the acquaintance with business affairs usually possessed by persons of their 
age. They did not have a full knowledge of the extent of their interest in the 
lands. Defendant represented to one or more of plaintiffs that they were liable 
to lose the land, thus exciting their fears. The consideration he undertook 
to pay the plaintiffs for the property was less than half its value.” 

Questions: 

(1) Define undue influence. 








IN COMMERCIAL LAW 


Contracts 25 


(2) May the plaintiffs have the contracts with Mr. Buchholz set aside and 
recover the rent for the land? Give reasons. 


Illegality 

3i- 

It appeared that one Robert Love offered to wager twenty dollars with one 
John Harvey that the grave of one Dr. Cahill, who died some years before, was in 
Hollyhood Cemetery, near Boston, lying to the right of the main avenue as it 
ran from the public highway through the cemetery to the chapel, providing that 
Harvey would wager a like sum with him that the burial-place was to the left of 
the avenue; that Harvey accepted the offer of Love; that both chose a person to 
act as stakeholder; that each placed $20 in his hands; that it was agreed that 
the stakeholder should accompany the parties to the cemetery the next morning; 
that they all went to the cemetery the next day; that there Love and Harvey, on 
viewing the burial-place, each claimed he had won the amount wagered, and 
each demanded from the stakeholder the whole sum deposited with him; that 
the stakeholder, in presence of both parties, delivered the sum of forty dollars, 
the amount deposited with him by both, to Harvey; that at the time Harvey 
received the money, Love forbade the stakeholder’s paying it to him, and told 
Harvey that he should take proceedings to get it. 

Questions: 

(1) What is the rule with regard to the validity of illegal agreements? 














26 Contracts PROBLEMS AND QUESTIONS 

(2) What redress will courts give when money is paid under an illegal 
agreement? 


(3) Is Love entitled to recover twenty dollars from HarVey? Give reason. 


(4) What would be the situation if the money had been paid to Harvey with 
Love’s consent? 


(5) Is it material who won the wager or that there was a difference of opinion 
as to who won it? Give reason. 


32 . 

In August, 1874, a complaint was entered in the Police Court of Lynn, 
against Edward K. Hood, for having mortgaged to Winfield S. Partridge certain 
real estate in Lynn, without informing him of an existing incumbrance upon it. 
This constituted a misdemeanor. Mr. Partridge foreclosed the mortgage and 
bought in the property, but of course could not get a clear title without removing 
the existing encumbrance, which had been concealed by Edward. 

Upon the day before the grand jury met, one Silsbee, agent of Mr. Partridge, 
went to the house of Mrs. Hermione Hood, mother of Edward, and told her that 
if she would purchase the land of Mr. Partridge at what it cost him, the criminal 
prosecution against her son would be stopped. Whereupon, and in order to keep 
her son out of jail, the following contract was drawn up, and signed by Mrs. Hood: 













IN COMMERCIAL LAW Contracts 27 

“In consideration of one dollar and other good and valid consideration to me 
paid, I hereby agree, upon the delivery to me and in my name, within three days 
from the date hereof, of a quitclaim deed, conveying the land described in a mort¬ 
gage deed to Winfield S. Partridge given by Edward K. Hood, said quitclaim deed 
to be given by said Partridge and said land to be free of all incumbrances except 
a mortgage now held by the South Scituate Savings Bank for twelve hundred 
dollars covering on a portion of said land, to give said Partridge a first mortgage 
deed for twelve hundred and fifty dollars, payable in two years at eight per 
centum per annum, interest payable semi-annually, on my homestead estate 
situated on Essex Street, Lynn, Mass. And also a power of sale first mortgage 
upon a portion of said land to be conveyed to me by said Partridge for one 
thousand dollars, payable in two years with interest thereon payable semi¬ 
annually at the rate of eight per centum per annum; said land being the westerly 
half of said land described in said mortgage from Edward K. Hood to W. S. 
Partridge. 

(Signed) “Hermione Hood.” 

Question :—Give legal reasons for approving or disapproving the foregoing 
instrument. 


33- 


Questions: 


(1) Upon what grounds are contracts in restraint of trade considered 
objectionable from the standpoint of public policy? 












28 Contracts 


PROBLEMS AND QUESTIONS 


(2) What is the general doctrine with regard to restrictive clauses in con¬ 
nection with the sale of the good will of a business? 


(3) What distinction is made between contracts in restraint of trade? 


34- 

Dr. John R. McClurg, a practicing physician, sold his “office fixtures and 
furniture, etc., with his good will in his profession ” to Dr. Benjamin Thompson for 
$125. The bill of sale contained the following paragraph: 

“The said J. R. McClurg hereby binds and pledges himself to remove not 
less than twelve miles from his present location, and for ever hereafter not to 
establish himself in the practice of his profession, within twelve miles, without the 
free consent of the said Dr. Thompson, also to use all his influence to throw all his 
practice to the benefit of the said Thompson, and to give countenance to no 
other in that direction.” 

What is your opinion as to the validity of this part of the agreement? 


35 - 

Slay ton gave Whitney a bond in the amount of $5,000 upon this condition: 
“that whereas the above named Slayton has this day sold out his foundry 
establishment in Calais, to the parties above named, and has agreed not to engage 














IN COMMERCIAL LAW 


Contracts 29 

in the business of iron casting within sixty miles of Calais for the term of ten years 
from this date; now if the said Slayton shall well and truly fulfil his said agree¬ 
ment, and not engage in said business within said space in said time, then the 
above bond to be void, otherwise to remain in full force.” 

What is your opinion as to the validity of the bond ? 


36 . 

One Nunnemaker was the owner of a horse, spring wagon, harness, cans, three 
tanks and other utensils for use in his business; he was engaged in the business 
of a retail oil and gasoline merchant; his customers, sales, and deliveries were 
confined to the city of Hammond, Indiana. 

Nunnemaker sold out his entire business, “right, title, and interest in and to 
his oil and gasoline business and plant,” good will, and everything used by him 
in that business, to the Consumers’ Oil Company for the sum of $300. 

In the contract of sale Nunnemaker agreed that he “would not, during the 
period of five years then next ensuing after the 4th day of February, 1893, do 
anything within the State of Indiana, outside of the city of Indianapolis, in the 
line of selling or delivering oil or gasoline to the houses of consumers by horse 
and wagon or otherwise, neither in his own behalf nor in his own name nor in 
connection with any partnership or corporation, nor as the agent of any person, 
partnership or corporation, nor in anywise do anything that would interfere with 
or compete with or work against the profit, advantage and business” of the pur¬ 
chasers. 

Give legal reason for approving or disapproving the restrictive clause in the 
contract of sale. 


















30 Contracts 


PROBLEMS AND QUESTIONS 


37* 

Pierre A. Brett had been engaged in the shipping business some 15 years, 
was well known in the business, and had a profitable business. The best shippers 
to Port au Prince gave him the preference in their shipments to that port. He 
sold out to Martin C. Ebel. In the following contract Ebel is “party of the first 
part” and Brett is “party of the second part.” 

“Whereas, both parties are engaged in the business of shipbrokers, chartering 
vessels for various ports in the West Indies and South America; and whereas, the 
party of the second part has built up a business in freighting vessels for Port au 
Prince, Haiti, and has established a line known as ‘Brett’s Line, Haiti Packets’; 
and whereas, the parties of the first part are desirous of acquiring such business 
and said line: The party of the second part hereby transfers and sells to the party 
of the first part all his interest and good will in the business of freighting vessels 
for Port au Prince and said Brett’s Line, Haiti Packets (not including'any right to 
use that name), and for the term hereinafter mentioned agrees not to solicit 
freights nor do any business with Port au Prince in or from any place or places 
in the United States east of the Mississippi river, except that he may, as a broker, 
effect charters for vessels to and from Port au Prince, and may sell to merchants 
merchandize for Port au Prince, . . . The party of the first part agrees to 
pay the party of the second part the sum of eighteen hundred dollars a year, in 
equal monthly payments in advance, beginning on the 7th day of November, 
1894, during the term hereinafter mentioned. This agreement shall continue 
in force for as long a time as shipments are made to Port au Prince by H. Becker 
& Co., of the city of New York, or their successors; but in no event shall the 
term be less than five years.” 

Give legal reasons for approving or disapproving the above agreement. 












IN COMMERCIAL LAW 


Contracts 


Consideration 

38. 

Mr. White was standing in the piazza of his house, in company with his 
wife and daughter. The daughter was twelve years of age. 

Pointing to a colt, at the time standing with its mother nearby, Mr. White 
said to his daughter: 

“That is your property; I give it to you.” The colt was ever afterwards 
known as her property, by the family and by the neighbors. When Mr. White 
died, the colt was one or two years old, and had never been out of his actual 
possession. 

Questions: 

(1) Define consideration. 


(2) What class of contracts is absolutely dependent upon consideration? 


(3) May one effectively give away his property, real or personal, without a 
legal consideration? 


(4) What are the essentials of a valid gift? 
















32 Contracts 


PROBLEMS AND QUESTIONS 


(5) How may one effect a gift of real property? 


(6) In the above situation, to whom does the colt belong, the daughter or 
the administrators of the estate of her father? Give reason. 


39- 

What are the requirements of consideration? 


40. 

“This agreement entered into this 13th day of February, 1856, between 
Zach. Schnell, of Indianapolis, Marion county, State of Indiana, as party of the 
first part, and J. B. Nell, of the same place, Wendelin Lorenz, of Stilesville, Hen¬ 
dricks county, State of Indiana, and Donata Lorenz, of Frickinger, Grand 
Duchy of Baden, Germany, as parties of the second part, witnesseth: The said 
Zacharias Schnell agrees as follows: whereas his wife, Theresa Schnell, now 
deceased, has made a last will and testament, in which, among other provisions, 
it was ordained that every one of the above named second parties, should receive 
the sum of $200; and whereas the said provisions of the will must remain a 
nullity, for the reason that no property, real or personal, was in the possession of 
the said Theresa Schnell, deceased, in her own name, at the time of her death, 
and all property held by Zacharias and Theresa Schnell jointly, therefore reverts 
to her husband; and whereas the said Theresa Schnell has also been a dutiful and 
loving wife to the said Zach. Schnell, and has materially aided him in the acquisi¬ 
tion of all property, real and personal, now possessed by him; for, and in con¬ 
sideration of all this, and the love and respect he bears to his wife; and, further¬ 
more, in consideration of one cent, received by him of the second parties, he, the 
said Zach. Schnell, agrees to pay the above named sums of money to the parties 
of the second part, to wit: $200 to the said J. B. Nell; $200 to the said Wendelin 
Lorenz; and $200 to the said Donata Lorenz, in the following installments, viz: 
#200 in one year from the date of these presents; $200 in two years, and $200 in 









IN COMMERCIAL LAW 


Contracts 33 

three years; to be divided between the parties in equal portions of $ 66 % each 
year, or as they may agree, till each one has received his full sum of $200. 

“And the said parties of the second part, for, and in consideration of this, 
agree to pay the above named sum of money (one cent), and to deliver up to said 
Schnell, and abstain from collecting any real or supposed claims upon him or his 
estate, arising from the said last will and testament of the said Theresa Schnell, 
deceased. 

“In witness whereof, the said parties have, on this 13th day of February, 
1856, set hereunto their hands and seals. 

“Zacharias Schnell [Seal] 

“J. B. Nell, [Seal] 

“Wen. Lorenz.” [Seal] 

Give legal reason for approving or disapproving the foreging instrument. 


41- 

Defendant in consideration of the plaintiff’s agreement to impart to the 
defendant “valuable information” which would increase the defendant’s profits, 
promised to pay to the plaintiff one-half of such increased profits. Thereafter, 
the plaintiff merely told the defendant that if the defendant would increase the 
selling price of its product, its profits would be increased. The defendant there¬ 
upon increased the price of its product one dollar per gross, and the net profits 
were increased to the amount of $131,364, more or less. 













34 Contracts PROBLEMS AND QUESTIONS 

Give legal reasons for your opinion as to the plaintiff’s right to recover one- 
half the increase in net profit. 


' 42. 

Daniel Mills lived in Hartford, Conn., and Seth Wyman at Shrewsbury, 
Mass. Levi Wyman, the 25-year-old son of Seth Wyman, was on his return from 
a voyage at sea, and was suddenly taken sick at Hartford. Mr. Mills, in order to 
relieve the young fellow, supplied him with board, lodging, nursing, etc., from 
the 5th to the 20th of February, 1821, when Levi died. 

Mr. Wyman wrote a letter to Mr. Mills, expressing his gratitude and 
promising to pay him such expenses. Subsequently, however, Mr. Wyman 
changed his mind, decided not to pay, and Mr. Mills brought suit to recover. 

Give legal reasons as to Mr. Mills’ right to recover. 


43- 


“Jan. 23, 1901. 

“I, Edward Gerrish, promise to place in trust for Joseph A. Gardner’s 
youngest son, born Jan. 1, 1901, $10,000, for naming his son after me— 
Edward Gerrish Gardner.” 


In consideration of the promise in the above writing, Mr. Gardner named 
his son “Edward Gerrish Gardner.” 














IN COMMERCIAL LAW Contracts 35 

Is there sufficient consideration to support the promise to pay $10,000? 
Explain. 


44. 

On August 5, 1850, L. B. Johnson and wife were duly elected principals of a 
school by the board of trustees, for a school year of ten months, to wit, from 
September 15, 1850 to July 15, 1851, at a salary of $2,500 for the two. The 
negotiations were between Mr. Johnson and authorized representatives of the 
board of trustees, resulting in an oral contract of employment on the above basis. 

In October Johnson came into town alone to assume his duties as principal 
of the school. When asked about his wife, he said that she could not come at 
that salary, that it would require another $2,500 to secure her services. This was 
agreed to. Mrs. Johnson came, and she and her husband conducted a successful 
school, in every way proving themselves to be the successful teachers that they 
were represented to be. 

To how much salary are they entitled for the school year? Give reason. 


45 - 

Plaintiff and defendant entered into a written contract whereby the de¬ 
fendant employed the plaintiff at a salary of $90 per week, beginning on the 
succeeding January 1st. Before that date, plaintiff refused to enter on his 
employment unless paid an increased salary, and the parties thereupon executed 
a contract providing for an increased salary ($100 per week). It seems that at the 













36 Contracts 


PROBLEMS AND QUESTIONS 


time of the signing of the new contract, the plaintiff tore off the signatures of the 
old contract, and the defendant remarked, “You do not want this contract any 
more because the new one takes its place.” 

Plaintiff worked from January until the following December, and was 
discharged. He brought an action for damages on the basis of the second contract. 

Is he entitled to recover? Give reason. 


46. 

On the night of January 6, 1896, the storehouse of defendant was burned by 
incendiary fire. On the next day he signed a paper publicly offering a reward for 
the apprehension and conviction of the person who burned the building. The 
sheriff saw the notice of reward, found the guilty party, arrested him, and 
procured his conviction. Is the sheriff entitled to the reward? Give legal reason. 


47- 

Plaintiff sold and delivered a quantity of merchandise to defendant. After 
the delivery, but before the defendant paid therefor, the defendant and the 
plaintiff became involved in a dispute as to the plaintiff’s failure to deliver mer¬ 
chandise under a prior and entirely separate contract. The defendant paid for 
the goods sold and delivered by check, deducting $1,538.97 as a “credit allow¬ 
ance” for the plaintiff’s failure to make proper deliveries under the prior contract, 
which sum was designated as a “credit allowance” on the margin of the check. 
The plaintiff accepted the check without objection. Thereafter, plaintiff sued 
defendant for the purchase price of the goods sold and delivered, claiming a 
balance due of $1,53^-97> the exact amount which the defendant had deducted 
for the plaintiff’s alleged failure to perform the prior contract. 











IN COMMERCIAL LAW 


Contracts 37 


Is he entitled to recover? Give reason. 


Mutuality 

48. „ 

“This contract made and entered into this November 17, 1908, by and 
between F. G. Walker Company, of Bardstown, Nelson County, Kentucky, a 
corporation, party of the first part, and the Rehm-Zeiher Company of Louisville, 
Jefferson County, Kentucky, party of the second part. 

“The party of the first part has this day sold to the party of the second 
part 2,000 cases of old Walker whiskey put up under a private brand, to be 
delivered during the year 1909, 3,000 cases to be delivered during the year 1910, 
4,000 cases to be delivered during the year 1911, and 5,000 cases to be delivered 
during the year 1912, at the following prices; quarts bottled in bond, $6.70; pints 
bottled in bond, $ 7.20; half-pints bottled in bond $7.70. 

“Should the party of the first part lose by fire the whiskey with which 
this bottling is to be done or the bottling room during the life of this contract, 
then they are to be held excusable for not filling same. If for any unforeseen 
reason the party of the second part find that they cannot use the full amount of 
the above named goods, the party of the first part agrees to release them from 
the contract for the amount desired by party of the second part.” 

Signed and Sealed. 

Suit was begun on the contract in 1912. 

Give your opinion as to the validity of the above contract, and the legal 
reasons therefor. 













38 Contracts 


PROBLEMS AND QUESTIONS 


49. 

On October 7, 1889, the plaintiffs, who were practical miners, entered into 
a verbal agreement with the defendant company, through its mining captain 
to go to work in what was called the “Cave Pit.” The mining captain, with 
whom the contract was made, said to plaintiff: “We will give you $1.50 a ton for 
all the ore you can produce anywhere in the pit.” To which offer the plaintiff 
replied: “All right; we will take the contract, and work it as long as we can make 
it pay.” 

Give legal reasons for approving or disapproving the foregoing agreement. 


50 . 

On the 24th of October, 1888, the plaintiffs (Philadelphia Ball Club, Limited) 
and the defendant (Hallman, a ball player) entered into an elaborate written 
agreement, whereby Hallman bound himself to play baseball for the plaintiffs 
for the period of seven months from April 1, 1889. 

Article 17 of the contract provided that the Ball Club might discharge 
Hallman' from their service at any time and without any cause whatever, upon 
ten days notice. 

Article 18 read as follows: 

“18. It is further understood and agreed that the said party of the first 
part (the Ball Club) shall have the right to ‘reserve’ the said party of the second 
part (the player) for the season next ensuing the term mentioned in paragraph 2, 
herein provided, and the said right and privilege is hereby accorded the said party 
of the first part upon the following conditions, which are to be taken and con¬ 
strued as conditions precedent to the exercise of such extraordinary right or 
privilege, viz.: 

“ I. That the said party of the second part shall not be reserved at a salary 
less than that mentioned in the twentieth paragraph herein ($1400 a season) 
except by the consent of the party of the second part. 

II. That the said party of the second part, if he be reserved by the said 
party of the first part for the next ensuing season, shall be one of not more than 








IN COMMERCIAL LAW Contracts 39 

fourteen players then under contract, that is, that the right of reservation shall 
be limited to that number of players and no more.” 

Hallman jumped his contract, and the Ball Club brought suit to enjoin 
him from playing for any other club on the ground that he would be violating 
his contract with the Philadelphia Club. 

May they enforce the contract against Hallman? Reasons? 


Operation of Contract 
51- 

In February, 1873, George F. Work, being the owner of certain premises, 
executed a trust deed thereon, to secure the payment of ten bonds, of $ 1,000 each, 
payable four years after the date thereof. 

Afterwards, and on the 1st day of August, 1873, Work conveyed the 
premises, by warranty deed, to Henry B. Jenks. Jenks mortgaged the property 
for $25,000 more, then sold it to one Algy Dean. The property is now encum¬ 
bered to the amount of $35,000. 

Dean sold the property to one Edwin Walker. The deed to Walker specified 
the above encumbrances by name, date, and amount, and contained the following 
clause: 

“Subject, however, to the two trust deeds, the taxes and claims aforesaid, 
all of which the said party of the second part (Edwin Walker) hereby assumes and 
agrees to pay as part of the consideration of this conveyance.” 

The instruments representing the indebtedness aggregating $35,000 were 
bonds executed by George F. Work and Henry B. Jenks, former owners of the 
property, for which Algy Dean assumed the responsibility of payment. Edwin 












PROBLEMS AND QUESTIONS 


40 Contracts 

Walker promised to assume this responsibility, when he bought the property 
from Dean. The bonds were secured by trust deeds and mortgages on the 
property. 

These instruments of indebtedness have been sold to Sweet and Hutchinson, 
investors, who now seek to hold Edwin Walker for payment. 

Answer the following questions: 

(1) With whom was Walker’s contract made? 


(2) Who is trying to enforce the contract? 


(3) Have the parties now trying to enforce Walker’s contract a right to sue 
on the contract? 


(4) If A promises B for a valuable consideration to pay C a sum of money, 
may C maintain an action against A for the money? Give reason. 


Assignment 

52. 

One Hopper agreed to sell to one Groezinger all the grapes which he might 
raise during a period of ten years from the vines which were then growing, or 















IN COMMERCIAL LAW 


Contracts 41 


which he might thereafter plant, in a certain vineyard. The grapes were to be 
“sound,” and were to be gathered when they contained twenty-two per cent of 
saccharine matter, and to be delivered in boxes at the wine-cellar of the de¬ 
fendant,—the “first crop” to be delivered separately from the “second crop” of 
the same year. In consideration whereof the defendant agreed to accept the 
grapes and pay for them (after delivery) at the rate of twenty-five dollars per ton, 
in specified installments—any advancements which might be made to draw inter¬ 
est at a given rate. 

The parties performed this contract for five years. At the end of that time, 
October, 1885, after the “first crop” of the year had been delivered to the buyer. 
Hopper sold his vineyard and assigned the above contract to one La Rue. Groe- 
zinger accepted the “second crop” of that year, which had been grown during 
the ownership of Hopper, with Hopper’s care and skill. Thereafter he refused 
to accept any more grapes, saying that he had no contract with La Rue. The 
latter thereupon sold the grapes to the best advantage, but lost about $2,473.20— 
the difference between the amount he actually received for them and the amount 
he would have received from Groezinger had the latter accepted and paid for 
them as before. La Rue brought suit against Groezinger to recover the aforesaid 
loss as damages. 

Answer the following questions: 

(1) (a) Give illustrations of contracts in which it is stated that they are not 
transferable. 


(b) Are the contracts good? 


(c) Are they assignable? 


(2) If Schultz agrees to buy from Johnson successive crops of hemp “of 
his own raising,” may Johnson assign the contract to someone else? Reason? 










4 2 Contracts 


PROBLEMS AND QUESTIONS 


(3) A has a contract to sell and deliver merchandise to B. A sells his busi¬ 
ness to X. There are prior circumstances that make it appear that it is not 
agreeable to B to deal with X. Must B accept deliveries from X? Reason? 


(4) Is a contract to render personal services requiring special knowledge or 
skill assignable? Reason? 


(5) A had a contract to deliver meat to a hotel, to be paid for at the end of 
each month. Could the hotel assign its part of the contract? Reason? 


(6) According to the facts in problem 52, was the action of Groezinger a 
breach of contract? 


Is La Rue entitled to recover? 


Reasons ? 

















IN COMMERCIAL LAW Contracts 43 

(7) Would an assignment of Groezinger’s part of the contract have been 
valid ? Reason ? 


f 

Statute of Frauds 
53- 

Jones was selling goods to Smith. One Cooper was present at the time, 
and in order to secure credit for Smith said to Jones: “ I will pay you if Smith will 
not.” Smith did not pay. May Jones collect from Cooper? Reason? 


54- 


“Mem. 28th May, 1852. I agree to sell R. H. Ives, the Peckham 
farm, now occupied and owned by me, say about 45 acres, in Newport, 
for the sum of fifteen thousand dollars ($15,000), payable 25th March, 1853, 
when possession is to be given. He, R. H. I., paying the annuity for 
December, 1852. 

(Signed) “ Charles T. Hazard.” 


The above memorandum and signature were written in pencil. Is the writ¬ 
ing sufficient to comply with the requirements of the Statute of Frauds? 

















44 Contracts 

55- 


PROBLEMS AND QUESTIONS 


Plaintiff v. Defendant 



Kearsarge Mill & Mining Co. 

• 

The plaintiffs were partners carrying on a general merchandise business at 
Independence, Cal. The defendant was an aged and retired man of some means, 
residing at San Francisco. His sons and son-in-law were the owners of most of 
the capital stock and the principal officers of the above named Mining Company, 
a corporation. 

The Mining Company was in debt to the plaintiff for over $ 2,000 and had 
been so delinquent in making payments that their credit was stopped. Gray, an 
officer of the Mining Company, called upon plaintiff and told plaintiff that his 
father-in-law (defendant) was “ coming up in a few days, and that the company 
would arrange with him to secure them for such accommodation as it might 
need, and it would be all right.” Extensions of credit to the Mining Company 
were resumed. 

Defendant came up, met and had a long conversation with the plaintiff, 
in which he praised voluminously and earnestly the merits of the mine, and, 
like the crack of a whip, ended his gesticulations with the terse statement, “You 
will not lose anything by the boys!” 

Plaintiffs now sue defendant for large sums of money owing to them by the 
Mining Company. 


Answer the following questions: 

(1) State the application to this case of the test for determining whether 
or not the promise is one to “answer for the debt of another.” 


0 ) If the defendant had made himself primarily and unconditionally 
liable for the credit extended to the boys, would the Statute of Frauds apply? 







IN COMMERCIAL LAW 


Contracts 45 


(3) Are the plaintiffs entitled to recover? Give legal reasons. 


56 . 

On March 2, 1874, John Bird and Halsey H. Munroe entered into an oral 
agreement by which Bird agreed to sell and Munroe agreed to buy 5,000 tons of 
ice at $4 per ton. On March 2 fa 1874, the parties executed the following written 
instrument: 


“Rockland, March 2, 1874. 

Memorandum contract by and between H. H. Munroe, of Thomaston, of 
the first part, and John Bird & Co., of Rockland, of the second part. 
The party of the first part agrees to pay the party of the second part four 
dollars per ton gross (2,240 lbs.) for five thousand tons of ice, weighed on 
board, price to include ice and freight to New York. The said party of the 
second part, agrees to deliver said ice on following conditions: Shipments 
to begin immediately, and to continue until full amount is shipped, cash 
to be paid on delivery of each cargo. Vessels to be discharged with 
despatch; demurrage, if any, to be paid by party of the first part, and no 
commissions to be paid on sales. 


H. H. Munroe 
John Bird & Co. 

Attest: Edmund A. Smith.” 


At the time the above writing was executed, one-half of the ice had been 
shipped; Munroe ordered shipments to be stopped, refusing to accept any more 
ice, on account of which Bird was put to extra expense for housing, loading, and 
handling, etc., amounting to $2,600. 

Bird brings suit for breach of contract, basing his claim for damages upon 
the entire contract for 5,000 tons of ice, plus the extra expense of $2,600 that he 
incurred on account of the breach by Munroe. 











46 Contracts 


PROBLEMS AND QUESTIONS 


Answer the following questions: 
(1) Is Bird entitled to recover? Give reasons. 


(2) Suppose the writing had been executed after Bird instituted the suit, 
would the answer be the same? Give reasons. 


57- 

Samuel McAnnulty, a widower, well advanced in life, owned considerable 
estate, real and personal. There were children and grandchildren of his living. 

Margaret Thompson, a widow, had a farm and other property of her own, 
and a number of grown children by a former husband. 

It seems that Mr. McAnnulty and Mrs. Thompson were very lonely, agreed 
to be companions to each other during the remainder of their natural lives, and 
were duly married. 



















IN COMMERCIAL LAW 


Contracts 47 


Mr. McAnnulty died first, and a dispute arose over the distribution of his 
property. Part of the family claimed that while Mr. McAnnulty was wooing 
widow Thompson, she, for a valuable consideration, and in view of their con¬ 
templated marriage, promised and did release and relinquish all interest in his 
estate, in the event that she survived him. 

Question :-—Assuming their contention to be true, what effect would such an 
agreement have upon the distribution of the property of the deceased Mr. 
McAnnulty? Give reasons. 


58 . 

Oral agreement entered into between A. Z., step-father, and W. D., step-son, 
that said W. D. should have the use of the farming lands of A. Z. during the life of 
A. Z., in consideration that W. D. would support A. Z. and his wife (mother of 
W. D.) during their lives. 

Is the Statute of Frauds applicable to this agreement? Give reason. 


59 - 

A had a coal mine. He made a contract with B whereby B was allowed to 
enter the mine and dig a certain quantity of coal. He made another contract 
with C, whereby he agreed to sell and deliver at C’s factory 100 tons of coal, from 















48 Contracts 


PROBLEMS AND QUESTIONS 


the coal which was not then severed. Both contracts were oral. Are these 
contracts within the section of the Statute of Frauds relating to real property? 
Explain. 


60. 

About the middle of March, 1864, William Oddy and John B. James entered 
into a verbal agreement by which James employed Oddy to superintend his 
cement works for one year from the first of April then next, for $900. On the 1st 
of April, Oddy entered upon the employment, took charge of the works and con¬ 
tinued his superintendency thereof until August 3d, when he was discharged by 
James. 

Oddy sued for his compensation for the remainder of the year upon the basis 
of his contract with James. May he maintain the action? Reason? 


61. 

Schiffman ordered from Funt 25 coats, designated as style No. 937, at the 
price of $34.50 per coat, and 22 coats, designated as style No. 934, at the price of 
$32.50 per coat. The style numbers were the numbers of styles designed and 
manufactured by Funt. Thereafter Funt made and delivered to Schiffman 11 
coats of style No. 937 and 7 coats of style No. 934- Schiffman refused to accept 
any more coats, and without reason, it appeared, canceled his contract. At the 















IN COMMERCIAL LAW Contracts 49 

time when the order for these coats were canceled, they were all in the course of 
manufacture. 

(1) Is this a contract for the “sale of goods, wares, and merchandise” or 
for “work, labor, and materials”? Give the test. 


(2) According to the above facts, at the time of the breach was the contract 
enforceable even though not in writing? Reason? 


Performance 

62. 

The Second Baptist Church of St. Louis, incorporated, let a contract to 
building corporation X to build a church according to specifications and to be 
completed within a specified time. They let another contract to corporation Y 
to “ make, finish and put in place" certain fixtures in said building, work to be 
completed within a specified time. In each case it was stipulated that in the 
event of the contracting corporation’s failure to complete the work within the 
time specified, there should be paid to the church the sum of $10 for every day 
that the contractor was in default. 

The building was, without fault of either party, destroyed by an accidental 
fire on January 2,1879. At the time the pews in the gallery and the pulpit screen 



















50 Contracts 


PROBLEMS AND QUESTIONS 


had been attached to the building. The other fixtures, including the pews for 
lower or audience room, were in the building on the floor and workmen were 
engaged in putting them in place. Workmen of the building contractor were 
still employed on different parts of the building. 

The time for completing the work under both contracts has now expired, 
and there remain in the place of the building and its furnishings only ashes. 

(i) Corporation X: 

(a) Excused for non-performance? 


(b) Recover anything for labor and materials? 


(c) Liable to the church in damages? 


(2) Corporation Y: 

(a) Excused for non-performance? 


















IN COMMERCIAL LAW 


Contracts 51 


(b) Recover anything for labor and materials? 


(c) Liable to the church in damages? 


63. 

The defendant, on the 7th day of December, 1853, tnade a contract in 
writing with the plaintiffs to build a school house for the sum of $2,469, and to 
complete the same by the first Monday of May, 1854; a part of the price to be 
paid by installments as the work progressed. The defendant commenced the 
building of the same, and had nearly completed it, when, on the 27th day of 
April, 18 54, it was struck by lightning, and consumed by the fire communicated 
thereby. At this time he had received $1,000 of the price, having been entitled 
thereto under the contract by the progress of the work. The plaintiffs, on the 
day following the destruction of the building, requested him to erect another 
building on the same site and of the same description, and offered to waive the 
condition of the contract with regard to the time within which the building was 
to be completed, and to allow him such further time as should be necessary. The 
defendant declined the offer and refused to do anything more toward the per¬ 
formance of the contract, and the plaintiffs brought suit. 

Judgment for whom and why? 
















52, Contracts 


PROBLEMS AND QUESTIONS 


64. 

Foeller, an architect, made two contracts with Heintz, one of which was to 
make plans and specifications for a dwelling house for Heintz, and the other for 
superintending the construction thereof. Foeller was responsible for seeing that 
the building was constructed according to plans. 

The building was completed, but “the plans for the structure were unwar¬ 
rantably changed by the architect in a material particular” resulting in a “struc¬ 
turally and architecturally” different building. The architect made these changes 
with the intention of improving the structure. 

It was found as a fact that the same could be changed to conform to the plans 
at a cost of $400. 

Answer the following questions: 

(1) State the doctrine that applies to this case. 


(2) What, if anything, may the architect recover on his two contracts ? 


65 - 

“A.”—West & Co. were coal and wood dealers in Grand Rapids. Bechtel 
was a dealer in wood at Manton. The former offered to purchase 400 cords of 
wood at $1 per cord, f. o. b. car at Manton, from the latter, if he would ship 
“right away,” promising to remit as fast as the wood should “come in.” The 
offer was accepted. Three cars were shipped, two were paid for, West & Co. 
owed for the third. 

The price of wood had gone up. Bechtel was offered $1.40 a cord for his 
wood by another firm. 












IN COMMERCIAL LAW 


Contracts 53 


Telephone conversation, February 22, 1899: 

Bechtel: “You have not paid for the last you got. When are you going to 
pay for that?” 

West & Co.: “We will pay for that when we get some more, and not before.” 

Bechtel: “We will not ship any more until you pay for what you’ve got.” 

West & Co. claimed that the refusal of Bechtel to ship any more wood was a 
breach of contract and sued for damages on the entire amount remaining un¬ 
shipped. 


Answer the following questions: 

(1) State the general doctrine with regard to entire and divisible contracts. 


(2) What test is applied in determining who broke the contract? 


(3) May West & Co. maintain their action against Bechtel? Give reason. 

















54 Contracts 


PROBLEMS AND QUESTIONS 


“B.”—Under a contract for the sale of moving picture films—at least one 
film to be delivered every month for one year, November, 1913 to October, 1914, 
inclusive, at a price of eight cents per foot, payment for each film was to be made 
within thirty days after exhibition to the public, and additional compensation 
to be paid by the buyer of one-half of the net profits realized by it as the result 
of foreign sales—the plaintiff delivered pictures of the value at the contract rate 
of nearly $ 10,000, which was payable on December 24, 1913. 

Seller demanded payment. Buyer refused. Two days later the seller 
terminated the entire contract, and, alleging breach by the buyer, sued for the 
amount due on the deliveries already made plus the profits that would have been 
gained through the completion of the contract. 

(1) Give your decision as to the plaintiff’s rights on the foregoing facts, 
together with reasons. 


(2) What general rule may be laid down with regard to the effect of non¬ 
payment or non-delivery of an installment? 


















IN COMMERCIAL LAW Contracts 55 

(3) How may complications over “divisibility”, and “entirety” of contracts 
be avoided? 


66 . 


<< [449-°°] Martinez, November 24th, 1866. 

“For value received, I promise to pay to S. Wolf, or order, four 
hundred and forty-nine dollars with interest at one per cent per month from 
date until paid, principal and interest payable in United States gold coin. 
This note is made with the express understanding that if the coal mines 
in the Marsh Ranch yield no profits to me, then this note is not to be 
paid, and the obligation herein expressed shall be null and void. 

“ (Signed) 

C. P. Marsh.” 


Up to November 1, 1871, the mines had yielded Mr. Marsh no profits, and 
upon this date (Nov. 1, 1871) he sold and conveyed his interest in the ranch, 
including the mines, to one Williams. 

(1) What principle of law is involved? 


(2) What rights has S. Wolf? 





















56 Contracts 


PROBLEMS AND QUESTIONS 


67. 

Mr. Clark owned a farm of 200 acres, and agreed to pay one Weber $100 
if he would find a purchaser for it. Weber found a purchaser for 117 acres of 
the farm, who actually bought that quantity from Mr. Clark. 

To how much commission is Weber legally entitled? Reason? 


Specific Performance 

68 . 

(1) In problem 65, could West & Co. secure a decree of “specific per¬ 
formance” compelling Bechtel actually to deliver the wood? Reason? 


(2) In problem 54, Mr. Hazard wrote Mr. Ives that he had changed his 
mind, that his wife said she wouldn’t sign the deed, consequently, he couldn’t 
convey the land, etc., etc. 

May Mr. Ives maintain an action for specific performance against Mr. 
Hazard, compelling him, under the writing there presented, to convey the land? 
Reason ? 
















IN COMMERCIAL LAW Contracts .57 

(3) In what instances will contracts to sell personal property be specifically 
enforced? 


(4) Defendant (Lillian Russell), an actress and singer, had made a con¬ 
tract with plaintiff (James C. Duff), a theatrical manager, to appear in such 
operas as he should produce during a certain season. Defendant was distin¬ 
guished in her profession, and a great artistic acquisition to any theater pro¬ 
ducing comic operas. Plaintiff had advertised defendant, at great expense, as a 
member of his company. During such season defendant refused to perform in 
an opera produced by plaintiff, and she, at that time, had agreed to appear at a 
rival theater to the end of the season. 

May the defendant be legally prevented from performing at the rival 
theater? Reason? 


Damages 

69. 

Plaintiffs were wholesale and retail dealers in dry goods. Defendants were 
manufacturers of knit underwear. It seems that on March 16, 1892, the defend- 



















58 Contracts PROBLEMS AND QUESTIONS 

ants agreed to manufacture for the plaintiffs about twelve thousand dozen knit 
undergarments of various styles, at agreed prices, delivery to be made by in¬ 
stallments but to be entirely completed by December i, 1892. 

At the time the contract was made, the defendants knew that the plaintiffs 
intended to sell such merchandise at a profit. Prior to December 1, 1892, the 
plaintiffs negotiated contracts with buyers, whereby they disposed of the entire 
twelve thousand dozen at a profit, of which contracts plaintiffs notified defen¬ 
dants. 

Defendants delivered 160 dozen of said goods, but refused to deliver the 
remaining part. Plaintiffs complied with the terms of the contract in every 
respect. There was no “general market” for the goods called for in the con¬ 
tract whereby a “market value” could be determined. 

Answer the following questions: 

(1) What is the general intention of the law in giving damages for a breach of 
contract? 


(2) In contracts of sale relating to goods that have an ascertainable “market 
price,” what is the measure of damages for breach of contract to deliver or to 
accept delivery? 

















IN COMMERCIAL LAW Contracts 59 

(3) Where there is not an ascertainable market price, what is the measure of 
damages? 


(4) Is it necessary for the seller to know at the time the contract is made 
what use the buyer intends to make of the goods? Explain. 


(5) When one party breaks a contract, and the plaintiff by some act or 
omission of his own allows a greater damage to result than would have resulted 
had it not been for his act or omission, can the plaintiff recover for such increased 
damage? 


(6) State, in a general way, the amount of damages to which the plaintiff 
would be entitled in problem 69. 

























6o Contracts 


PROBLEMS AND QUESTIONS 


Construction Problems 

Land Contract 

70. 

James E. Brown is the owner of the East Half of Lot 10, Block 4, School 
Section of the city of Everhope, your state. William E. Stone, same city, wants 
to buy the property, and has offered Mr. Brown $10,000 for it. Mr. Brown has 
expressed his willingness to sell at that price, but demands cash upon delivery of 
the deed. Mr. Stone wants three months’ time in which to prepare to complete 
the transaction. Draw up a contract by which the parties will be bound, three 
months hence, one to buy and pay for and the other to sell and give a full war¬ 
ranty deed to the above-described property. 

Construction Contract 

7i- 

(1) Draw up a contract with the Standard Construction Company, Inc., 
your city, to lay, for the school that you attend, a sidewalk along the front of the 
property occupied by the school. 

(2) Draw up a contract with the Standard Construction Company, Inc., 
your city, to build for you a garage for your individual use. 

Employment Contract 

72. 

Draw up a contract of employment between yourself and a company for 
whom you would like to work, for a position that you would like to have, and 
for a period of one year, beginning one month from the date of the contract. 
Use current date. 





SALES OF PERSONAL PROPERTY 


Note: The Problems here given are based upon the Uniform Sales Act. 


i. 

What is the difference between a sale and a contract to sell? 


2 . 

On the 31st day of December, . . . the parties entered into an agreement 
by which, among other things, Mr. Alger agreed to sell and deliver 36,667 tons 
of iron ore to the Hudson Iron Company, for which the Company agreed to pay 
Mr. Alger in pig iron, at the rate of one ton of pig iron for every eight tons of ore 
delivered. Was this a contract to sell? Reason? 


3* 

Defendants conducted a restaurant. Plaintiff entered the restaurant as a 
customer, seated herself at a table, and ordered “creamed sweetbreads.” The 
dish was served, and plaintiff ate part of the portion of “creamed sweetbreads.” 
Was this transaction a sale? Reason? 














61 Sales 


PROBLEMS AND QUESTIONS 


4- 

“This agreement, made this 8th day of December, A. D. 1913, by and 
between M. L. Decker of the village of Paw Paw, county of Van Buren, State 
of Michigan, party of the first part, and Royal E. Decker and Rule J. Crosbie of 
the village of Paw Paw, county of Van Buren, State of Michigan, parties of the 
second part, witnesseth: 

“First, that the said party of the first part shall and will sell to said parties 
of the second part, the following described property, to wit: 

(Description) 

“Second, that said.parties of the second part shall and will pay for said 
property the sum of eleven hundred ($1,100) dollars, and interest,” etc., etc. 

Signed, sealed and delivered. 

(1) Is the above contract an executed contract of sale or an executory con¬ 
tract to sell? 


(2) How do you determine the answer to the above question? 


(3) Did the above contract convey title to the property? 


















IN COMMERCIAL LAW 


Sales 63 


5- 

Plaintiff, Harry Kugler, testified that he brought the defendant, Harry 
Ginsberg, some waists and asked “if he (defendant) could manufacture some 
waists for me.” Defendant said he could and the price was fixed at $39 a dozen 
waists. Plaintiff further said that he “was supposed to sell” defendant silk 
at $1.25 a yard; and that the price of the silk was to be credited against the con¬ 
tract price of the waists. Plaintiff sent the silk to defendant with the following 
memorandum attached: “Sent to Alco Waist & Dress Co. for my use only. 
H. Kugler.” The waists were to be manufactured from this silk and returned 
to Kugler in two weeks. While the silk was in the defendant’s possession, his 
premises were burglarized and the silk stolen. 

(1) What was the nature of the transaction? 


(2) In whom was the title to the silk all the while? 


(3) Upon whom does the loss fall? 

















PROBLEMS AND QUESTIONS 


64 Sales 

6 . 

What are the essentials of a valid contract of sale? 


7 . 

(1) What right has a thief to the property that he steals? 


(2) What right has one to property that he finds? 


(3) May a thief or a finder give good title to the property? 


8 . 

(1) What is the general rule with regard to the kind of title one may pass? 


(2) What are the exceptions to this rule? 


















IN COMMERCIAL LAW 


Sales 65 


9- 

One Scully was the manager and in charge of the lumbering operations of 
the Constantia Lumber Corporation. The lumber company furnished him a 
Ford runabout plainly marked with the name of the company. 

Without the consent or knowledge of the lumber company he traded it in 
for a Ford touring car. Subsequently, Scully transferred all of his right in the 
touring car to the lumber company, but retained the actual possession of the 
touring car, using it as he had done theretofore. 

The lumber company sold the car to Hier & Co., giving them a written bill 
of sale, but before they secured possession of the car, Scully traded it in to the auto¬ 
mobile sales company for a Ford sedan. What became of Scully and the sedan 
was not known. Apparently he absconded. Who has title to the Ford touring 
car? Reason? 


10. 

On April 17, 1869, as the schooner Florence Reed, owned by John Low & 
Son, was about to sail from Gloucester on a fishing voyage, that firm received 
$1,500 from Alfred Low & Company in consideration of the following writing: 

“We, John Low & Son, hereby sell, assign and set over unto Alfred Low & 
Company all the halibut that may be caught by the master and crew of the 
schooner Florence Reed, on the voyage upon which she is about to proceed from 
the port of Gloucester to the Grand Banks, at the rate of five cents and a quarter 
per pound for Hitched halibut, to be delivered to said Alfred Low & Company as 
soon as the said schooner arrives at said port of Gloucester at their wharf. And 
we, the said John Low & Son, hereby acknowledge the receipt of $1,500 in part 
payment for the halibut that may be caught by the master and crew of said 
schooner on said voyage.” 

The schooner arrived and was docked at her wharf with a catch of about 
40,000 pounds of halibut, and some cod-fish. 









66 Sales 


PROBLEMS AND QUESTIONS 


(i) What, apparently, was the intended purpose of the above writing? 


(2) What was the legal effect of the above writing? 


(3) After the schooner docked, in whom was the title to the halibut, and 
who would have to bear the loss in the event of its destruction or disappearance ? 


11. 

Andrew Mitchell, a farmer, raised a crop of potatoes which, consisting of all 
grades, amounted to about 3,000 bushels. The potatoes had been dug, and lay 
scattered over the field. Shindle, agent of Weiner Bros., wholesalers, visited the 
farm, looked over Mitchell’s crop, and the two drew up and signed a contract, 
of which the following is a part: 

“Hartford, October 16, 1917. 

“I, Andrew Mitchell, of Buckland, Conn., have after due consideration sold my 
entire crop of potatoes to consist of about two thousand bushels of number one 
potatoes, to be well graded for two dollars per bu., to Weiner Bros, of Hartford 


“I further agree to deliver the potatoes when Weiner Bros, desires to have me do 
so.. 
















IN COMMERCIAL LAW 


Sales 67 


“A check of fifty dollars is hereby given to bind contract and to apply on account 
of potatoes. 

“Andrew Mitchell, 
“Weiner Bros, 
per T. S. Shindel.” 

(1) What is the purport of the contract? 


(2) What is the legal effect of the contract? Reason? 


(3) As Shindel drove away rejoicing over the deal that he had negotiated, 
who actually owned the potatoes ? Reason ? 


12. 

Plaintiffs were manufacturers of dyes. They received an order from de¬ 
fendant for 6,000 pounds of aminil sky blue dyes, on a regular order blank, 
appearing somewhat as follows: 

“ 1. Quality: guaranteed to be equal quality as your last shipment. 

“2. Price: $3.80 per pound f. o. b. New York. 

“3. Package: packed in 100# good, strong export barrels (later modified 
to 500-pound barrels). 

“4. Shipment: before 15th of October. 

“5, Marks: DN-401-Kobe, Yokohama No. 1 up. 

“6. Destination: half Kobe and half Yokohama. 













68 Sales 


PROBLEMS AND QUESTIONS 


“7. Samples: two ounce bottle shipping sample is to be presented ... in 
duplicate duly sealed and stamped. 

“8. Weights and Measurements: Gross to be furnished when ready for 
shipment.” 

Plaintiff accepted the order and “promised defendant to sell and deliver said 
dyes upon terms and conditions stated in said order.” Furthermore, plaintiff 
agreed to hold the goods for the defendant, subject to the latter’s order. 

What is the effect of the foregoing order and acceptance? Reason? 


13 - 

(1) What ordinarily governs the passing of title? 


(2) How determined? 


“ Unless a different intention appears ” 
Application of Section 19, Rules for ascertaining intention 


14. 

Cassinelli owned two stacks of hay, situated upon his ranch near Reno, 
Nevada. He was a party to the following agreement: 














IN COMMERCIAL LAW 


Sales 69 


“No. 964 

“Humphrey Supply Company 

“Dec. 1st, 1916. 

“Bought of Peter Cassinelli the following. I have sold all of my hay to 
Humphrey Supply Co., except about thirty tons at Ten Dollars per ton to be 
measured by same rule as sold to Nevada Packing one year ago, to be fed by P. 
Cassinelli free or we can feed ourselves, Cassinelli to furnish team and wagons. 

“The above hay to be delivered at once when measured and I hereby 
acknowledge receipt of $500. 

“His mark X Peter Cassinelli 

“Seller. 

“H. L. Nichols, 

“Buyer. 
“W. E. Fuhrman.” 

On December 2, before anything further had been done, and without fault 
of either party, the entire lot of hay was destroyed by fire. 

(1) What is the legal difference between hay and potatoes (problem 11) ? 


(2) Was the subject matter of the present transaction specific or ascertained 
goods ? 


(3) Did anything remain to be done to put the goods in a deliverable state? 


(4) Was it a “sale or return” or sale on approval? 


(5) Where do you think delivery was to be made? 














70 Sales 
Why? 


PROBLEMS AND QUESTIONS 


(6) Did the agreement make delivery a condition precedent to the passing 
of title? 


(7) Does the agreement purport to be a sale or a “contract to sell”? 


(8) And yet the court held that the agreement did not pass title, because 
“a different intention appeared” in the instrument. What is the evidence of a 
different intention ? 


(9) Whose loss? 


15- 

Plaintiff owned two cribs of corn, one containing 1,600 bushels, intact, the 
crib having not been opened. The other crib had been used from, and contained 
about 700 bushels. Plaintiff sold to defendant “ not less than 1,600 nor more than 
2,300 bushels of corn” at a stated price per bushel, and received $50 of the 
purchase money, but reserved the right to retain 200 or 300 bushels, if he needed 
them, and a third party was entitled to 50 bushels. The corn reserved was to be 
taken from the broken crib. Delivery was to be accepted at the cribs, the buyer 
doing his own hauling. The entire transaction was oral. The buyer said to the 
seller: “The money is yours, and the corn is mine,” to which the seller assented. 
Both parties, then and thereafter, spoke of the transaction as an actual sale. 













IN COMMERCIAL LAW 


Sales 71 


But, soon thereafter, before any corn had been hauled, that inevitable fire¬ 
bug came along and burned up the entire property, corn, cribs, and all. Now, 
neither party wants to own the corn. 

(1) Was the oral contract enforceable? 


(2) In whom was the title to the corn? 


(3) Who bears the loss ? 


16. 

It appears that the lumber in question, consisting of some 3,500 feet, was cut 
and manufactured by Jakimaki and Johnson, a copartnership operating a port¬ 
able sawmill near Automba, in Carlton county. It was piled in stacks at the 
scene of operations and was the only lumber owned by them in that locality. 


















72 Sales 


PROBLEMS AND QUESTIONS 


The lumber was sold by the firm, or by Johnson, a member thereof, to the plaintiff, 
Superior Box Co., on some date in July, 1917, at an agreed price per thousand 
feet, of which $300 was paid at the time, the balance being payable when the 
lumber was scaled at Superior, Wisconsin, to which point it was to be shipped, 
being plaintiff’s place of business. 

Plaintiff immediately, with the knowledge and assent of the sellers, had the 
lumber insured in his own name against loss by fire. 

Subsequently, and in February, 1918, before the lumber had been shipped 
out, Jakimaki and Johnson undertook to cancel and rescind the sale to plaintiff, 
and to that end returned the down payment of $300 with interest, and thereupon 
immediately sold or attempted to sell the lumber to another firm at a considerable 
advance over the price plaintiff had agreed to pay. 

Who owns the lumber? Reason? 


17 - 

The plaintiff was engaged in the business of buying and selling woolen rags. 
Defendant was a manufacturer of shoddy. The testimony of the plaintiff’s 
president, which the jury accepted, was in part as follows: On July 8, 1918, Mr. 
Bernstein (president of defendant corporation) called him on the telephone and 
asked whether he had khaki clippings (waste from the manufacture of overcoats 
and uniforms for the use of the army), and he replied that he had and would sell 
him two bales of overcoat clippings and one bale of worsted clippings, and quoted 
a price of forty-five cents a pound for the overcoat clippings and seventy-five 
cents a pound for worsted. Mr. Bernstein told him that he would purchase them 
and would confirm the purchase in writing, which he did on the tenth of July. 












IN COMMERCIAL LAW 


Sales 73 

The overcoat clippings were already baled, and on the same day that the written 
confirmation was received the worsted clippings were sorted out and made up 
into a bale. The three bales in the afternoon of that day were tagged and set 
apart to be held for the defendant to call for them. Thereafter the defendant 
sent a truck to plaintiff’s place of business between twelve noon and twelve-thirty 
o’clock. The shipping clerk told the truckman that the men were out at lunch, 
but that if he would wait five minutes some of them would be in and would get the 
bales down for him. The truckman thereupon drove off. Defendant thereafter 
refused to accept the goods. 

It was also shown that the worsted clippings had to be sorted from a large 
quantity of miscellaneous clippings in order to separate different grades and 
colors. 

(i) Is the contract entire or divisible? 


(2) When, if at all, did the title pass from the seller to the buyer? 


Reason ? 


18. 

Plaintiff sold defendant 50 bushels of potatoes to be delivered at the residence 
of the plaintiff. Defendant called for, received, and accepted 29 bushels. The 
remaining twenty-one bushels were prepared and set apart by plaintiff ready for 
delivery and defendant notified, but defendant neglected to call for them and 
they rotted and became of no value. 

(1) Who owned the 21 bushels of potatoes that rotted? 












74 Sales 


PROBLEMS AND QUESTIONS 


(2) Was there any obligation on the part of the seller to care for the 21 
bushels of potatoes or to resell them and realize what he could from them? 
Reason ? 


19. 

The plaintiff is a Wisconsin corporation engaged in the sale of music and 
musical instruments with its principal place of business in Milwaukee, Wisconsin. 
Plaintiff’s business with the defendant was transacted through H. W. 
Randall, manager of the player piano department. Randall sold the plaintiff 
a Melville-Clark Apollo player piano. In February, 1914, she returned 
to the store and expressed a desire to exchange it for a new instrument. 
A short time after this defendant called again and the price was discussed. 
Randall offered to take the Melville-Clark player piano and $250.00 in exchange 
for the $1,000 Conover inner player piano. Defendant was satisfied with the 
price provided she liked the new instrument. She felt that the Steck ^Eolian 
player piano was her choice, but she consented to go to Chicago with Randall and 
see the Conover instruments there, where the assortment offered greater oppor¬ 
tunity for choice. Randall paid the expenses of the trip, and upon reaching 
Chicago took defendant to the Cable Company’s warerooms and from there to 
the Cable factory. They met a Mr. Baumann, who was in charge at the factory, 
and they tried out several instruments. Defendant finally showed a preference 
for one and agreed to take it provided the case would be stained a certain darker 
color and the tone made more brilliant, which was agreed to by Randall and the 
Cable Company. Randall then escorted defendant to the depot, where he sug¬ 
gested that she sign an order, to which she assented. The material parts of 
the order are: 


Date of order. 

4-2-14 
Salesman 
H. W. R. 
Ship to 

Town and State 

Ship when- 

Terms 


Sold to 


J. B. Bradford Piano Co., 

Milwaukee, Wis. 
Miss B. Hacker , 

Hartford , Wis. 


Miss B. Hacker 
Hartford , Wis. 


Price 


Cash delivered 

Conover Inner Player p. c. c. 167237. $1,000.00 

Cr. 

Melville-Clark Piano R. Mahy.. 750.00 


(Signed) Bertha Hacker 


$250.00 










IN COMMERCIAL LAW 


Sales 75 


On April 7, 1914, Miss Hacker (defendant) sent a letter to the Bradford 
Piano Company repudiating the contract. The piano was still at the factory 
in the process of being varnished. 

At this stage, who has title to the piano? Reason? 


* 


20. 

The defendant occupied a farm about a mile from the village of Marcellus, 
in the county of Onondaga, where he had his crop of hay in two barns and two 
stacks. On the 27th day of September, 1917, a verbal contract was concluded 
between the plaintiff and defendant by the terms of which the plaintiff was to 
buy and the defendant to sell the hay for $12.50 or $13 per ton; the plaintiff 
within a reasonable time was to bring a pressing machine to the farm with three 
operators to bale the hay; the defendant was to furnish all the help for the 
pressing, baling, pitching the hay to the press, and was to board all the help; 
after the hay was baled the defendant was to draw it from his farm to Marcellus 
and deliver it to the cars at that place; the plaintiff paid to the defendant $350 
on account of the purchase price within two or three days after the 27th of Sep¬ 
tember, 1917. 

Up until November, 1918, the hay had not been pressed or baled. 

(1) Is the verbal agreement enforceable? Reason? 


(2) Did the title pass from the seller to the buyer? Reason? 
















76 Sales 


PROBLEMS AND QUESTIONS 


21. 

Plaintiff is a wholesale dealer in plumbers’ supplies and gas and electric 
fixtures in New York City. Defendant, a retail dealer in gas and electric supplies 
in New Haven, consulted the plaintiff with a view to adding the sale of plumbers 
supplies to his business, and because of the defendant’s lack of experience in 
handling these goods, it was agreed that the plaintiff should select a suitable line 
of plumbers’ supplies which the defendant would buy on condition that he 
should have the right to return any part which he could not use or sell, and pay 
only for such as were retained. The agreement was oral, as, also, was the order 
'of purchase. On March 2, 1917, plumbers’ supplies of the agreed price of $453.81, 
less 2% discount for cash within thirty days, were sold to the defendant on these 
terms, and at the same time gas and electric fixtures of the price of $180.74 were 
sold outright to the defenda#. A cash payment of $100 was made at the time and 
applied, at defendant’s request, on purchase of gas and electric fixtures. Beginning 
immediately after shipment, and before some of the plumbers’ supplies had been 
received, the plaintiff requested the defendant to pay for all of the goods. Within 
thirty days the defendant asked that the original payment of $100 be transferred 
to and credited upon the account of plumbers’ supplies, and made a further pay¬ 
ment on that account which balanced it. The payments were made for the 
purpose of taking advantage of the 2% discount. 

On May 7, 1917, the defendant reshipped to the plaintiff plumbers’ supplies 
of the invoice value of $195 because he found them unsalable. 

Plaintiff refused to receive them, on the ground that by paying for all the 
plumbers’ supplies the defendant had elected to retain them. 

(1) In a contract of “sale or return,” when does the title pass? 


(2) In the above case, to what goods did title pass, and what kind of title? 










IN COMMERCIAL LAW Sales 77 

(3) Was the buyer entitled to return the plumbers’ supplies that he re¬ 
shipped? Reason? 


(4) In case of destruction or disappearance of the plumbers’ supplies during 
those two months that they were in the buyer’s possession, whose loss would it 
be ? Reason ? 


22. 

On the 6th day of September, 1911, plaintiff delivered to defendant at his 
“Twenty-third Street Theater” four Multax lamps “on a thirty days’ trial.” 
The lamps were not actually installed until the seventh or eighth day of Sep¬ 
tember. They were taken down on the fifth or sixth day of October, and were 
not thereafter used by the defendant. The seventh of October was Saturday, 
and on Monday, the ninth of October, the defendant notified the plaintiff to 
remove the lamps from his premises. The plaintiff now sues the defendant for 
the value of the lamps. 

The above constituted the entire body of facts that the court had for 
consideration. 

(1) Is there anything to indicate that the parties intended a sale if the lamps 
proved to be satisfactory? 

















78 Sales 


PROBLEMS AND QUESTIONS 


(2) In any event, in whom would the title be during the thirty-day period? 


(3) Is the fact that the defendant’s notice was given three days after the 
expiration of the stated time detrimental to his case? 


(4) Has the plaintiff any rights against the defendant in this case? 


23 - 

The plaintiff, a corporation doing business in Buffalo, New York, and the 
defendant, who was a merchant at Plainville, Connecticut, contracted on June 
8th, 1912, for the sale of five carloads—about 7,500 bushels—of No. 2 white 
oats, to be shipped from Buffalo to points as later directed; deliveries to be made 
in June or July, price 62 cents a bushel, or if not taken until July, 62^ cents, 
less freight to Boston points; also for two carloads of new No. 3 white oats, to be 
shipped during September, 1912, to Plainville, at 49 cents per bushel, less freight 
to Plainville. Payment by sight draft, bill of lading attached. 

The defendant took and paid for two carloads of No. 2 oats, and wired the 
plaintiff on June 18th to cancel the balance of the contract, which the plaintiff 
declined to do. After fruitless negotiations for a settlement, the defendant. 















IN COMMERCIAL LAW 


Sales 79 


shortly before July 22, 1912, informed the plaintiff’s agent that he would give no 
shipping instructions for any of the oats, and would not accept or pay for any 
more oats under said contract. 

On July 22d and 24th, at Worcester, Massachusetts, the plaintiff sold three 
carloads of No. 2 white oats and two carloads of No. 3 white oats at a loss, as 
found by the court, of $370. 

(1) When did the breach of contract become effective? Reason? 


(2) In whom was the title to the undelivered oats? Reason? 


(3) May the plaintiff recover the $370? Reason? 


24. 

It appeared that one Voelker, agent of defendant (Meyers) went to see 
plaintiff (Bundy) in September, 1918, and said to him, “I got a telephone from 
Meyers this morning' and he wants cabbages. I will tell you what I will do. I 
will give you $21 a ton for all that you can get and load.” To which plaintiff 
replied, “all right.” 
















8o Sales 


PROBLEMS AND QUESTIONS 


Plaintiff bought up three carloads of cabbage. Two cars were loaded and 
delivered and paid for by defendant. A third car, containing 25,670 pounds, was 
loaded, but was promptly refused by defendant as soon as he was notified that 
the car had been loaded. 

(1) Is the statute of frauds applicable to the contract? 


(2) In whom is the title to the third car of cabbage? Reason? 


(3) May the seller maintain an action for the purchase price? Reason? 


r 


25 - 

Marley Mills Corporation manufactured paper which was used exclusively 
for printing wall paper. For some time prior to June 1, 1916, they were finan¬ 
cially embarrassed and aid was. furnished them by the Enterprise Wall Paper 
Company in the following manner, to wit: 

The Marley company agreed “to sell and deliver to the Enterprise company 
the total output of its paper mill at Beaver Dam, Penna ... for the price or 
sum of $2.40 per hundredweight, terms net f. o. b. mill” and the Enterprise 
company agreed “to buy and pay for, at said rate, the output of said mill.” 

The Enterprise company further agreed to supply all necessary materials 
upon condition that “all raw materials purchased by the Enterprise company 














IN COMMERCIAL LAW 


Sales 81 


under the terms of this agreement shall be and remain the property of the 
Enterprise company.” 

The Marley company was to be charged with the raw materials furnished 
and credited with the manufactured output in accordance with the aforesaid 
agreement to sell. “At the end of the term of this agreement, an account shall 
be had between the parties hereto and any balance due or owing by one to the 
other shall be immediately paid and discharged.” 

(i) Was the nature of the transaction that of sale or bailment? Reason? 


(2) In whom was title to goods in process ? Finished goods ? Reason ? 


(3) What would constitute an appropriation of the finished goods to the 
contract? 


(4) Could creditors of the Marley company attach the goods prior to such 
appropriation ? After such appropriation ? Reason ? 


















82 Sales 


PROBLEMS AND QUESTIONS 


26. 

Plaintiff, a Newfoundland corporation engaged in the business of buying 
and exporting fish, sold to defendant in New York 400 casks of codfish, c. i. f. 
New York, which by the custom of the trade requires the buyer to pay a fixed 
price for which the seller furnishes the goods and pays the freight and insurance 
to the point of delivery. 

Plaintiff delivered the fish on board the steamship Stephano at St. Johns 
on October 4, 1916, and two days later the steamship while en route to New York 
was torpedoed and sunk by the German Submarine “U-53.” Plaintiff had pro¬ 
cured marine insurance, which did not include such a loss on the shipment and no 
war risk insurance was obtained thereon. 

(1) What determines the kind or kinds of insurance to be procured by the 
seller on c. i. f. contracts? 


(2) Does Rule 5 of Section 19, Sales of Goods Act, apply to c. i. f. contracts? 
Reason ? 

















IN COMMERCIAL LAW 


Sales 83 


(3) In a c. i. f. contract, when has the seller fulfilled all his obligations? 


(4) In a c. i. f. contract, when does the title pass to the purchaser? 


(5) If the seller has properly fulfilled his obligations in a c. i. f. contract and 
the goods are destroyed en route , whose loss is it? 


27. 

(1) When does title pass in sales f. o. b. place of shipment? 


(2) When does title pass in sales f. o. b. destination? 



















PROBLEMS AND QUESTIONS 


84 Sales 

(3) Goods sold f. o. b. place of shipment, “sight draft, bill of lading attached, 
with the privilege of examining the goods on arrival”. 


(4) Where the price agreed on is “on cars” at a certain place and the seller 
is directed to “ship to” the buyer at his place of business? 


(5) Buyer ordered goods and wrote, “Deliver to any common carrier, ad¬ 
dressed to me . . .1 also agree to pay the cost of transportation.” Title 
passes when? 


(6) When does title pass in C. O. D. shipments? 


Remedies for Breach of Sales Contracts 
28. 

Where the title has passed to the buyer: 

(1) What are the rights of the seller against the buyer for the latter’s failure 
to perform the contract? 



















IN COMMERCIAL LAW 


Sales 85 


(2) What are the rights of the buyer in case of the seller’s failure to perform ? 


Where the title has not passed , 

(1) What remedies has the seller? 






















86 Sales 


PROBLEMS AND QUESTIONS 


(2) What remedies has the buyer? 


30 . 

What is the measure of damages in sales contracts? How measured or 
determined ? 























IN COMMERCIAL LAW 


Sales 87 


Warranties 

Express Warranty: 

“An express warranty is an affirmation of fact inducing a sale” 226 
Mass. 316, (1917). 


3i. 


Bill of Sale 


“W. H. Bennett H. M. Doane 

J. R. Honors 

Essex Automobile Company 

Pleasure and Commercial 


Vehicles 


Telephones: 

170 Broad Street 

172-173-8273 

Lynn, Massachusetts 


9-30-12. 

Sold to Frank J. Glackin 


73 Harwood St., 


Lynn, Mass. 


1 Used 1907 Peerless car 

$600 .00 

Credit by deposit October 1, 1912 

50. CO 

Guarantee as to parts same as with a new car. 

Balance $550.00 

Essex Auto. Co., 


H. M. Doane 

Received payment, Oct. 7, 1912 


Essex Automobile Company 


Per---” 

• 


Glackin claimed that during the oral negotiations for the car it was repre¬ 
sented to him that the car could be operated for twelve miles on one gallon of 
gasoline, but that in fact the car would go only seven miles on one gallon. He 
brought suit for damages for broken warranty. 









88 Sales 


PROBLEMS AND QUESTIONS 


(i) Would the representation, per se , constitute a warranty? Reason? 


( i ) May Glackin maintain his action for breach of warranty? Reason? 


32 . 

From the following expressions pick out those that constitute express 
warranties: 

“XX pipe iron”; “extra fine peas”; “best piece of cloth in the market”; 
“unsurpassed and unsurpassable”; “ve,ry fine stock”; “suitable and proper for 
New York City market”; “very good condition”; “very fine reading-matter, 
fit for anybody to read.” 


33 - 

Defendant sold to plaintiff a Seitz motor truck that had been used for 
demonstration purposes, representing that it “was a first class car, was as good 
as new and was in sound and first-class condition; and that if it was not abused 
but handled with care, it would last the plaintiff at least four years.” To what 
extent is this statement a warranty? 




















IN COMMERCIAL LAW 


Sales 89 


34 - 

On or about June 24, 1913, defendant purchased from plaintiff one auto¬ 
mobile. The memorandum of sale contained'the words “car guaranteed fully 
for one year.” Within the year, but after the car had been driven about 3,500 
miles, the frame broke, while in ordinary use, the radiator leaked and the brakes 
did not work properly. 

(1) To what extent was the guaranty a warranty? 


(2) Upon discovery of the above defects could the buyer return the car 
and rescind the contract? Reason? 


(3) Upon discovery of the defects could the buyer have kept the car and 
maintain a claim for damages? Reason? 


(4) Would delay on the part 
be fatal to his rights? 


of the buyer in taking advantage of his remedies 


















90 Sales 


PROBLEMS AND QUESTIONS 


35 - 

A horse was sold and warranted to be “sound and true in every spot and 
place, except one eye.” 

After the sale and delivery, it developed that the horse had “a habit of 
becoming unmanageable while being shod.” 

Was the warranty broken? Reason? 


36 ' 

“Unless a contrary intention appears,” what are the implied warranties in 
a sale or a contract to sell? 

























IN COMMERCIAL LAW 


Sales 91 


37 - 


What is the rule of caveat emptor? 

































92 Sales 


PROBLEMS AND QUESTIONS 


58 . 

The plaintiff was engaged in the business of importing bulbs and selling them 
wholesale to florists. The defendant operated a greenhouse at Minot, N. D. 
Defendant ordered certain bulbs from plaintiff in 1916 and 1917? and the contract 
embraced by the order, among other things, contained the following stipula¬ 
tion: . . . “on account of the goods having been imported and of many other 
circumstances entirely beyond our control, no guaranty of the character of the 
goods, sizes, or flowering results is given under any circumstances.” 

Upon receipt and examination of the bulbs, defendant wrote plaintiff, in 
part, that the Formosa lily bulbs received on the order were very, very small and 
poor, only 61 bulbs out of three cases measuring up to standard, in fact, they 
were the poorest lot of lily bulbs he had ever received. 

Some correspondence ensued about the possibilities of a crop, and finally, 
the plaintiff advised, . . . “we think the best thing to do will be to ship you 
some cold storage Giganteum,” in consequence of which plaintiff shipped cold 
storage Giganteum bulbs as a substitute for the Formosa lily bulbs, called for in 
the order. Defendant accepted the substitute bulbs and planted them. The 
crop was a failure. The plaintiff knew, by reason of the correspondence, the 
purpose for which the defendant wanted the bulbs. 

The plaintiff brought suit to recover a balance of $861.55, which the defend¬ 
ant had not paid. The defendant filed a counterclaim based on the inferior 
quality of the goods substituted, claiming consequential damages for the failure of 
the flower crop in the amount of $843.26. 

(1) Does Section 15, (1) of the Sales Act apply to the above facts? Reason? 


(2) Judgment for whom? Reason? 











IN COMMERCIAL LAW 


Sales 93 


39 - 

Philadelphia, Pa., 

July io, 1917. 

“Gentlemen: 

“Confirming our telephone conversation of even date, will you kindly 
arrange to furnish three hundred eighty-five (385) tons of first quality bituminous 
coal for bunker to our S. S. Fagernes, due to arrive in this port within the next 
few days?” etc., etc. 

The coal was supplied as agreed. 

A few weeks later (August 4, 1917) the same navigation company wrote to 
the same coal company as follows: 

“Confirming our telephone conversation of even date with Mr. Brown, we 
desire you to enter our order for one thousand (1,000) tons bituminous coal for 
delivery to our steamers between August 15th and 31st. It is understood that 
the price for this coal is to be five dollars and eighty-one cents ($5.81) per ton 
trimmed in bunkers,” etc., etc. 

The coal company duly acknowledged and accepted the order, agreeing 
upon the price “ trimmed in bunkers.” The S. S. Toso arrived, and its bunkers 
were filled. The buyer did not have an opportunity to inspect any of the coal. 

By this time, it had been found that the coal supplied to the Fagernes was 
full of foreign matter, consisting of slate, mud, sand, and stone to the extent of 
about 25% of its bulk, that it would not keep up steam, and that whereas the 
normal speed of the vessel was 12 miles an hour, the steam developed with the 
coal supplied would not enable it to maintain speed in excess of 7 miles an hour. 
The coal on the Toso was then examined and found to be of the same kind. 

Whereupon, the navigation company immediately rejected the coal, refused 
to pay for it and ordered that it be removed from the Toso. This was done, and 
the coal company immediately resold the coal for $5.50 a ton. 

(1) Was the coal supplied “merchantable”? 









94 Sales 


PROBLEMS AND QUESTIONS 


(2) Did the navigation company want the coal for a particular purpose of 
which the coal company was informed at the time of the sale? 


(3) Was there a breach of implied warranty? 


(4) Was the navigation company within its rights in rejecting the coal? 


40. 

Plaintiff, a farmer, contracted to purchase a fertilizer called “crude fish” 
from defendant, upon the representation of defendant’s sales agent that it was a 
specially good fertilizer for raising sweet corn. He received and used the contents 
of a number of bags shipped by defendant and labeled “crude fish,” but his crop 
failed, and he then discovered that the contents of the bags were not “crude fish,” 
but something else. He brought suit for damages for the loss of his crop, basing 
his claim upon an estimated profit that he would have realized had the fertilizer 
been as represented. 

(1) To what extent was there an implied warranty? 




















IN COMMERCIAL LAW 


Sales 95 


(2) May the plaintiff recover damages on the basis claimed? 


41. 

The plaintiff became infected with a parasite found in pork and known as 
trichina. She purchased the pork from the defendant, a retail dealer. The meat 
appeared clean, good and wholesome. It also bore the United States govern¬ 
ment stamp to the effect that it was sound and fit for consumption and free from 
defect. The plaintiff cooked the meat and she and her family ate it and were 
made sick. She sues the retailer for damages. 

(1) Do the above facts give rise to an implied warranty under section 15 (1) 
of the Sales Act? Reason? 


(2) Is the plaintiff entitled to recover damages? If so, how measured? 


42. 

Section 15 (1) of the Sales Act presupposes and requires for its application 

(a) A sale of goods; 

(b) That the buyer “expressly or by implication” make known to the seller 
the particular purpose for which the goods are to be used; and 























9 6 Sales 


PROBLEMS AND QUESTIONS 


(c) That the buyer rely upon the “skill or judgment” of the seller. 

Prepare an argument of not less than ioo words nor more than 500 words 
for the decision that should be given on the following facts: 

The defendant, a municipal corporation (City of Mechanicville, N. Y.), 
authorized by its charter, provided, maintained and controlled sources of water 
supply to furnish necessary water for drinking and domestic uses to its inhabitants 
and means for conducting water from the sources through the streets and to the 
dwelling houses and other places where it was delivered and sold to and consumed 
by inhabitants of the city; the defendant furnished and supplied, for a com¬ 
pensation, water for drinking and domestic uses to the premises occupied by the 
plaintiff and his family, consisting of five children, which water, to the knowledge 
of the defendant, was customarily regularly used and drunk by them; the water 
contained the germs of typhoid fever, through the drinking of which the plaintiff 
and his children became ill with that disease and plaintiff sustained damages, for 
which he now sues. Judgment for whom? 

















IN COMMERCIAL LAW 


Sales 97 


43 - 

(i) Define “merchantable.” 


(2) In what sales is there an implied warranty of merchantability? 


(3) In sales by description what implied warranties of quality are there 
other than merchantability? 


44. 

Louis Schwartz, et al ., plaintiff, sold 
Herbert R. Kohn, et al., defendant. 

a quantity of “pussy willow” taffeta by sample. The seller also added “as is” 
to the sale, and the goods were so billed. The goods delivered was not “pussy 
willow” taffeta, aor were they of the quality of the sample. Defendant returned 





















98 Sales 


PROBLEMS AND QUESTIONS 


the goods and refused to pay. Plaintiff refused to accept the return and sued 
for the price. Judgment for whom? Reason? 


45 - 


Remedies for Breach of Warranty 

(i) What are the remedies for breach of warranty? 


(2) What is the measure of damages for breach of warranty? 























IN COMMERCIAL LAW 


Sales 99 



(3) In case of breach of warranty of quality, what are the two ways of 
determining such loss? 


Installment Sale 

46. 

(1) In the case of a conditional sale of goods where payment of the price is 
to be made by installments, who has title to the goods ? 


(2) Who has possession? 





















ioo Sales 


PROBLEMS AND QUESTIONS 


(3) Why is it desirable to have such sales recorded? 


47 . 


Chattel Mortgage 

(1) What is a chattel mortgage? 


(2) Who has title to the goods on which there is a chattel mortgage? 


(3) Who has possession of the goods? 


(4) Why is it desirable to have chattel mortgages recorded? 




















IN COMMERCIAL LAW 


Sales ioi 


48. 


Memorandum Required by Statute of Frauds 

Plaintiff and defendant exchange letters as follows: 


“American Alcohol Co. 

Inc. 

“Trade-Mark. Registered 

“Cologne Spirits, Commercial and Denatured Alcohol. 

“April 10, 1917. 

“Messrs. E. Eising & Co., 

51 Water Street, 

New York City. 

“Gentlemen: 

“This will confirm offer made to you on 100 barrels of H. P. grain spirits at 
67c per gallon in bond. We will deliver the goods alongside steamer free of 
charge after you pay the tax. We understand that this offer is accepted by you 
subject to a trial sample of one barrel, and we believe we can have this barrel for 
you some time this week. Awaiting in anticipation, we remain, 

“Yours very truly, 

“American Alcohol Company, Inc. 

“AB-G “A. Balinsky, V. P.” 

Eising & Co. did not answer this letter, but on April 19, 1917, wrote to 
Mr. Balinsky as follows: 


“Dear Sir: 

“We have not as yet received the trial sample of one barrel of high proof 
grain spirits as per your letter of April 10th, and wish you would advise us when 
delivery will be made. We remain, etc. E. Eising & Co., Inc.” 


(1) What must a memorandum of sale contain in order to comply with the 
statute of frauds? 









io2 Sales. PROBLEMS AND QUESTIONS 

(2) Is it necessary for the entire memorandum to be on one piece of paper or 
in the same writing? 


(3) In problem 48, how would you interpret the memorandum? 


49. 


“Sept. 12, 1917. 

“Caesar Mills, New York City, N. Y.: 

Gentlemen:—Kindly enter my order for government bombazine to count 64x60, 
water repellent finish, 100,000 yds. at I3>^c per yard and 150,000 yds. at 13c per 
yard, deliveries as follows: 


“ 25,000 yds. in November. 
75,000 yds. in December. 
100,000 yds. in January. 
50,000 yds. in February. 


“Should there be an advance in the gray goods market, between the nth of 
September and the nth of September, the price of 13c should be changed accord¬ 
ingly up to 13X C * Terms to be 2-10-60. 

[Signed] “G. Jacobson”. 

The carbon copy bore in typewriting the same words, and also bore in ink. 
at the bottom thereof, the signature “B. Miller” after the word “Seller.” Miller 
was, in fact, not the seller, but the avent of the seller. 













IN COMMERCIAL LAW Sales 103 

(1) Is oral evidence admissible to prove Miller’s relation to his principal? 
Reason ? 


(2) Is there evidence in the memorandum of the fact of agreement of both 
parties—acceptance of the order—if so, what? 


(3) Is the memorandum sufficient to comply with the statute of frauds? 


50 . 

“New York, December 7, 1916. 

“Sold for account of Messrs. W. R. Grace & Co., of San Francisco, Cal., to 
Messrs. S. Lipschitz & Co. of N. Y.: 1,200 pkts of Siam usual at 2.90 per pocket of 
100 lbs. gross and 97 lbs. net f. o. b. Seattle, in double pockets. Terms as had. 
Shipment December from Hongkong. 

“[Signed] I. Silverberg, Comm. Co., Brokers”. 

Is the above writing sufficient to prove the contract between Grace & Co. 
and Lipschitz & Co. under the statute of frauds? Reason? 



















104 Sales 


PROBLEMS AND QUESTIONS 


5i- 

A memorandum of sale contained the following terms: “2-10-60.” 

Thereafter, in an entirely different transaction, the memorandum used the 
words “Terms as had.” 

Has the plaintiff sufficient evidence to prove the second contract under the 
statute of frauds (assuming that the memorandum contained everything else 
necessary) ? Reason ? 


52 . 


“ Gatti-McQuade Co., 
Hoboken, N. J. 


“New York, January 26, 1916. 


“Gentlemen: 

“We placed an order with your Mr. Massa, for fifty ton of light color chio: 
kindly make that fifty-four ton. The following are the sizes and quantity, of 
each size, to be made: 

4 ton 24 — x 35 No. 60 

4 26 — x 44 40 

4 “ 26- x 5 o “ 35 

2 “ 19 — X 4 I “ 45 

4 26 — x 38 “ 40 

4 26 — x 38 “ 40 

4 34 — x 46 “ 3 2 

4 “ 34 —x 52 “ 26 

4 “ 34 -x 5 8 “ 23 

4 29 — x 46 “ 35 

2 26 — x 38 “ 70 

2 26 X 38 “ 60 

2 “ 29 — X 44 “ 55 

2 32 X 42 “ 40 

2 “ 32 — X 44 “ 50 

2 29 —X 42 “ 50 

2 “ 34X43 “ 26 

2 26 - X 35 “ 48 







IN COMMERCIAL LAW Sales 105 

the above to be light color chip, grain running the long way, board must be stiff 
and dry, with a rough finish. 

“Half of each quantity, and each size of the order must be shipped in at 
once. The other half of the order to be shipped in on February 25th, 1916.” 
“Very truly yours, 

“Eagle Paper Box Co.” 

The following is the postal card, postmarked January 28, 1916, 9:30 p.m., 
sent by the Gatti-McQuade Co. to the Eagle Paper Box Co.: 

“Hoboken, N. J., 1-27, 1916. 

“We acknowledge with thanks your esteemed order of the 27th inst., which 
will receive our immediate attention.” 

Question: 

Are the above writings sufficient to prove the contract under the statute of 
frauds? Reasons? 


53- 


“Telephone Madison Square 4253. 

“New York, Aug. 4, 1919. 

“M. Schwartz & Lerner, West 29th Street, City. 

“Louis Vigden Importer-and-Exporter 
of Furs and Skins. 

1316. 

“Terms: Net Cash. 49 West 29th Street. 

“2103 Raw Damages and Shot rats at 75 cents, $1,577.25. To be delivered 
from Funsten Bros., St. Louis, Mo.” 










io6 Sales 


PROBLEMS AND QUESTIONS 


Schwartz sued Vigden for damages for failure to deliver the furs and in order 
to prove the contract submitted as evidence the above memorandum which, 
apparently, was on a billhead of Vigden. Both parties were dealers in furs. 

(i) Is the memorandum sufficient to prove the contract under the statute of 
frauds ? Reason ? 


(2) May Schwartz recover? Reason? 


54 - 

Emerman & Baumoehl Co., defendant, were sued upon an alleged contract, 
the evidence and circumstances of which were as follows: 

J. C. Bogner, agent for Jones Wieser, called upon defendant, and wrote the 
order set forth below upon the back of one of his business cards: 

“5-I5-I9* 

“Two bbl. (2) of pure white shellac cut five pounds to a gallon cut $2.85 per 
gallon. If price declines to charge market price. 1st Sept. del. 

“J. C. Bogner.” 

This is all the written evidence that the plaintiff, Mr. Wieser, had to prove 
the contract. Is it sufficient? Reason? 
















IN COMMERCIAL LAW 


Sales 107 


55 - 

“Messrs. Arbuckle Bros., Old Ship and Water Street, New York City— 
Dear Sirs: We have advised Messrs. Francke, Hijos & Co. to deliver to you 10,000 
bags Cuban Centrifugals expected to arrive within the next few days per S. S. 
Syndic. As per agreement with your Mr. Kennedy, these are to be held for later 
return. 

“Coenraad De Waal.” 

This was O. K.’d by an agent of Arbuckle Bros. 

The above letter was submitted as evidence to prove a contract obligating 
one party to sell and the other to buy 10,000 bags C. C. Is it sufficient ? Reason ? 


56. i 

On December 16, 1919, defendant sent a telegram to plaintiff, saying, “Mr. 
Mack, our representative, is expected to call to see you Wednesday.” 

January 20, 1920, Mack sent this telegram to defendant (his principal): 

“Can buy Weidener’s fish for twelve cents. Have offered eleven and one- 
half. Five hundred dollars deposit demanded.” 

January 21, 1920, defendant telegraphed Mack: 

“If necessary pay one-half cent more. Five hundred dollars wired. Ship 
car on 23rd.” 

And on January 22, 1920, defendant wired Mack: 

“Have not sent funds yet. Try cancel Weidener shipment for this week.” 

Can you determine from the above messages what agreement, if any, was 
concluded between the parties. Reason ? 


















io8 Negotiable Instruments 


PROBLEMS AND QUESTIONS 


NEGOTIABLE INSTRUMENTS 

Based upon N. I. L. 

Form and Interpretation 

i. 

(i) What is the significance of “transferability”? 


(2) What is the general rule with regard to the kind of title that one passes 
in a sale? 


(3) What is the principal characteristic of “negotiability”? 


















IN COMMERCIAL LAW 


Negotiable Instruments 109 


2. 

What are the requirements of negotiable form? 


3 - 

“New York, April 19, 1905. 

“Mr. Archibald C. Haynes, 

“General Agent, 

“The Equitable Life Assurance Society, 

“No. 25 Broad Street, N. Y. 

“Dear Sir:—I hereby acknowledge having received from Mr. W. E. Watts policy 
No. 1447474 being for $ 1,000.00 on my life in the Equitable Life Assurance 
Society. You are authorized and requested to place the said policy in force from 
this date, and I promise to pay you or your order the first annual premium, 


amounting to $53.10, as follows: 

“ Cash paid W. E. Watts. $21.24 

“On July 10th, 1905. 10.00 

“On Sept. 10th, 1905. 10.00 

“On Nov. 10th, 1905. 11.86 


“Very truly yours, 

Is the above a negotiable instrument? 


$ 53 - 10 

“Arthur N. Taylor.” 

Reason ? 


















no Negotiable Instruments 


PROBLEMS AND QUESTIONS 


“$13,070.86 August 30th, 1910. 

“I, Cecelia W. Donohoe, after date, August 30th, promise to pay 
to the order of Richard Donohoe, Thirteen Thousand and Seventy 
Dollars and 86-100 Dollars without defalcation, value received, with 
interest at 6%—Witness my hand and seal. 

“Elester Johnson [Seal] 

“Notary Public.” 


Is the above a negotiable instrument? Reason? 


“For value received, thirty days after date I promise to pay William 
W. Conover or order, one hundred dollars, without defalcation or discount, 
on condition, nevertheless, if John P. Stillwell procure and deliver to said 
William W. Conover a bond, executed by me and Cyrenius Hendrickson, in 
thirty days from date hereof, indemnifying said William W. Conover 
against any claim that is or may hereafter arise, relating to the premises 
which said Stillwell and wife sold and conveyed heretofore to said Conover, 
then this note to be void, otherwise to be in full force. 

“April 3d, 1861 

“John P. Stillwell.” 














IN COMMERCIAL LAW 


Negotiable Instruments 111 


Is the above note negotiable? Reason? 


""S, 153.5° Stockton, Cal., June 30, 1884. 

“On or before three years after date, without grace, I promise to pay 
Alonzo Rhodes, or order, the sum of $8,153.50, payable only in gold coin 
of the government of the United States, for value received, with interest 
thereon in like gold coin, at the rate of eight (8) per cent per annum, 
from date until paid, interest payable annually, and if not so paid as it 
becomes due, to be added to the principal, and become a part thereof, 
and bear interest at the same rate; but if default be made in the payment 
of the interest, as above provided, then this note shall immediately become 
due at the option of the holder thereof. 

“C. A. Page”. 


Is the above negotiable? Reason? 


“On demand after date I promise to pay to the order of Ann Maria 
Sprague One thousand Dollars with interest at 8% per annum. In case 
of Mrs. Sprague’s decease, the principal to be kept as a fund for the Baptist 
Society at Westminster, Mass.; interest to go to Theodosia Mills Whitman; 
and in case of her decease, interest to go to said Baptist Society. 

“Signed ‘John Doe’”. 













1 12 Negotiable Instruments 


PROBLEMS AND QUESTIONS 


Is the above a negotiable promissory note ? Reason ? 


8 . 


“Draft No. 14849 H. O. No Accepted 190 to be paid on acct. of the 
London and Lancashire Fire Insurance Co. of Liverpool, England. 

“.Manager. 

“ Countersigned.Cashier. 

“$360.43 Claim No. 

Boston, March 4th, 1907. 

“Upon acceptance the 

Connecticut Trust & Safe Deposit Co. 
will pay to the Order of Solomon YafFee Three hundred and sixty. . .. 
j 4 0 - 0 Dollars which payment evidenced by proper endorsement hereof con¬ 
stitutes full satisfaction of all claims and demands for loss and damage by 
fire on December 25th, 1906 to property described in policy No. 6442019 
issued at the Lynn Agency and said Policy is hereby cancelled and sur¬ 
rendered to the Company. 

“To the 

London & Lancashire Fire Insurance Co. of Liverpool, England. 

“Agency Department, Hartford, Conn. 

“Joseph F. Givernand, 

Special Agent.” 


A fire had injured property insured by the insurance company. The loss, 
for which it was responsible under the terms of its policy, had been tentatively 
adjusted between the insured and a special agent of the insurance company, 
whose authority to make payment or sign an instrument fixing its liability was 
limited to the extent of requiring approval or ratification by the Hartford agency 
of the defendant insurance company. The special agent gave the insured the 
above instrument. Is it negotiable? Reason? 












IN COMMERCIAL LAW 


Negotiable Instruments 113 


9 - 

One Hugh Blackman was a soliciting agent of the R. M. L. Insurance Co. 
He sold a policy to one Wm. J. Spies, who gave the following note for the 
premium: 

“Des Moines, Iowa, December 13, 1906. 

“Thirty days after date I promise to pay to the order of the Royal 
Mutual Life Insurance Company or Hugh Blackman the sum of Two 
hundred and sixty-eight ($268.00) Dollars, with interest. 

“In case of the death of the insured before this note falls due, the 
above amount with interest shall be deducted from the amount of the 
policy. 

“Wm. J. Spies.” 


Is the note negotiable? Reason? 


10. 

“As per verbal agreement made between Mr. John Fulton, Jr., and our Mr. 
Varney, we hereby agree to pay you the sum of Ten hundred Fifty-nine dollars 
and Ninteen cents ($1,059.19), ninety days from date, this amount to be paid out 
of our profits on the 3 East 40th street job.” 

The above instrument was addressed to Mr. John Fulton and signed by 
George A. Varney & Co. Is it negotiable? Reason? 

























114 Negotiable Instruments 


PROBLEMS AND QUESTIONS 


ii. 


$3400. Ritzville, Wash., 2-17-1906. 

“On or before six years after date, without grace, I promise to pay to 
the order of Daniel Schulz thirty-four hundred and no-ioo dollars in gold 
coin of the United States of America, of the present standard value, with 
interest thereon, in like gold coin, at the rate of 8 per cent per year from 
date until paid, for value received. Interest to be paid yearly and if not so 
paid, the whole sum of both principal and interest to become immediately 
due and collectible, at the option of the holder of this note. And in case 
suit or action is instituted to collect this note, or any portion thereof, 
I promise and agree to pay, in addition to the costs and disbursements 
provided by statute, two hundred dollars in like gold coin, for attorney’s 
fees in said suit or action. 

“Due on or before 2-17-1912, Heinreich Jacob Koch. 

“At Ritzville, Wash. Anna (X) Mary Koch. 

“Her mark. 

“Witnesses: W. R. Cunningham, Sr. 

“J. S. Graves. 


“The above note is given with the understanding that Heinreich 
Jacob Koch will put lA of the E. of.Sec. 25 and 19 N. R. 33, E. W. M.; 
and of the S. of the S. of Sec. 30, T. 19 N. R. 34, E. W. M.; every 
year after 1906, in wheat, either fall or spring wheat, and deliver of the 
wheat grown on this land, free of cost to Daniel Schulz, each year at some 
warehouse in Ritzville, Wash.;. . .While it is understood that the delivery 
of half of the wheat each year is compulsory with Heinreich Jacob Koch, 
yet he has the privilege to deliver more wheat each year if he chooses to 
do so. After six years from the date of this note, the wheat payments will 
cease, and Heinreich Jacob Koch will pay the balance on said note,” etc., 
etc., etc. 

“Ritzville Wash. Feb. 17, igo6 Heinreich Jacob Koch 

“Anna (X) Mary Koch 

“Her mark. 


“Witnesses: W. R. Cunningham, Sr. 

“J. S. Graves.” 


Is the above instrument negotiable? Reason? 






IN COMMERCIAL LAW 


Negotiable Instruments 115 


Hans Pederson Construction Co. No. 794 

Seattle, Washington. 

Contract at Doty, Washington Date 9-17, 1914* 

This certifies that S. W. Bugbee pay roll account No. 399 has worked 

as Teaming at 3, from 8-20,1914 to 9-31,1914. Total.days and 914 

hours, at the rate of 60c per hr. 

Amount. $548.40 

Deductions: 

Board. $7.00 

Commissary. .60 

Hospital. 

Miscellaneous. 

Cash on account. 310.67 


Total deductions. 318.27 


Due. $230.13 


Camp No. 3, 

Doty, Wash. 

Payable at 

Raymond Trust Co. Bankers, 

Raymond, Washington. 

for Two Hundred and Thirty and 13-100 Dollars. (Not valid over 
Two Hundred and Fifty Dollars.) 

“S. W. Bugbee, J. H. Barnes, 

Employee Superintendent. 

J. W. Penfield, Timekeeper 

This time check must be presented at once.” 


Is the above check a negotiable instrument? Reason? 






















16 Negotiable Instruments 


PROBLEMS AND QUESTIONS 


13 - 


.3 « 




O Vr, 
<U rt hh 
o +-> >v 
c c 
o _r 
22 u-C 

*3 +-> 

h * £ 

I—» 


“125.00 Tunnelton, W. Va., July 7, 1915. 

“One year after date for value received I promise to pay to 
the order of A. L. Delany one hundred and twenty-five dollars. 

“Negotiable and payable at The Tunnelton Bank of Tunnel- 
ton, W. Va. The makers and endorsers of this note hereby waive 
protest, presentation and notices of dishonor with costs of collection 
and attorney’s fee in case payment shall not be made at maturity. 

“(Signed) C. M. Shaffer.” 


“ Endorsed 

“A. L. Delany 
“A. J. Mason.” 

Is the above instrument negotiable? Reason? 


















IN COMMERCIAL LAW 


Negotiable Instruments 117 


“ $1,000. ., Minnesota, April 23, 1904. 

“On or before December 1, 1905, I promise to pay to the order of Fred B. 
Lawrence One thousand and no 100 Dollars, with interest at the rate of 6% 
per annum from date. 

“It is agreed that if crop on Secs. 25 and 26, Twp. 145-483 is below 8 
bushels per acre for the year 1905 this note shall be extended one year. 

“T. S. Bilstead. 

“ Jno. M. Hetland.” 


Is the above instrument negotiable? Reason? 


IS- 


“900.00 No. 0187. 

Cambridge, Idaho, May 8, 1903. 
“Six months after date, for value received, I, we, or either of us jointly 
and severally promise to pay to the order of Uinta Hereford Cattle Com¬ 
pany the sum of nine hundred dollars, with interest at the rate of ten per 
centum per annum from date until paid. 

“Payable at the office of the People’s Bank, Salubria, Idaho. 

“Should this note be collected by suit, ten per cent shall be allowed 
holder as attorney fee. The sureties, guarantors, and endorsers of this note 
severally waive presentation for payment, protest and notice of protest. 
No extension of time of payment with or without our knowledge by the 
receipt of interest or otherwise shall - release us or either of us from the 
obligation of payment. 

“J. H. Bolan.” 












PROBLEMS AND QUESTIONS 


118 Negotiable Instruments 

The “joker” in the above instrument is in the last sentence. Study it 
carefully, and answer the following questions: 

(i) What agreement is unmistakably implied or indirectly expressed in the 
last sentence? 


(2) What effect does that have upon the time of payment? 


(3) What effect does that have upon the negotiability of the instrument? 


16. 

The defendant in obtaining a loan from its bank for $20,000, on September 
5,1914, gave the bank four promissory notes for $5,000 each, payable ninety days 
after date and pledged certain collateral as security. Each note contained this 
clause: 

“This note shall become due and payable on demand at the option of the 
payee when it deems itself insecure.” 

Were the notes negotiable? Reason? 



















IN COMMERCIAL LAW 


Negotiable Instruments 119 


i7- 

A note payable one year after date, contained also the following: 

“To be paid when any dividends shall be declared on such shares as Joseph 
Smith has been holding heretofore in the Agricultural and Broom Handle 
Manufacturing Company.” 

What effect does the above clause have on the note? Reason? 


18. 


“ $2,000.00 Winslow, Arizona, April 23rd, 1908. 

“Nine months after date, for value received, waiving grace and pro¬ 
test, I, we or either of us, jointly and severally, promise to pay to the order 
of the Navajo County Bank of Winslow, Arizona, two thousand dollars 
with interest at the rate of 10 per cent per annum from date until paid, 
principal and interest payable in U. S. gold coin, with ten cent additional 
on amount unpaid if placed in the hands of an attorney for collection. 
We agree that after maturity this note may be extended from time to 
time by any one or more of us without the knowledge or consent of any 
of the others of us, and after such extension the liability of all parties shall 
remain as if no such extension had been made. We hereby expressly waive 
all homestead and exemption laws and rights thereunder. Interest 
payable monthly in advance. Payable at the Navajo County Bank, 
Winslow, Arizona. 

“The White Mountain Health Resort, 

“By Geo. P. Sampson, Pres. 

“Attest: W. C. Kirker, Sec’y.” 


Is the above note rendered non-negotiable by the clause relating to extension 
of time? Reason? 












1 20 Negotiable Instruments 


PROBLEMS AND QUESTIONS 


“250.00 New York, N. Y., July 3, 1905. 

“January 15, 1906, after date we promise to pay to Newton J. 
Baxter two hundred and fifty dollars at 58 Carroll St., Buffalo, N. Y. 

“Buffalo Carriage Top Company, 

By John Doe”. 


(1) Is the above note negotiable? Reason? 


(2) May it be transferred or assigned? Reason? 


20. 


“New York, October 18, 1910. 

“Four months after date I promise to pay Ten hundred forty-four 
71-100 dollars at 23Wd. Bank. Value received. 

“Wm. T. Hookey.” 



















IN COMMERCIAL LAW 


Negotiable Instruments 121 


Is the above instrument negotiable ? Reason ? 


21. 

On a certain day Addison Smith made and delivered to one Eliza M. Smith 
his promissory note in writing, dated on that day, and thereby promised to pay 
the estate of Eliza M. Smith, upon her death, a certain number of dollars. 

Was the instrument negotiable? Reason? 


22. 


“4192.50 Zanesville, Ohio, February 12, 1907. 

“ Four months after date we or either of us promise to pay to the Old 
Citizens’ National Bank of Zanesville, Ohio, Four thousand one hundred 
ninety-two and 50-100 Dollars, value received, payable at said Bank 
with interest at 6 per cent per annum. 

“No. 17319. Due June 12. J. E. Blackburn 

“Elmer Dover 
“J. B. Owens.” 


Is the above instrument negotiable? Reason? 


23- 

“The New York Security and Trust Company, New York, July 11, 1901, 
has received from Caroline Zande the sum of five hundred dollars of current 
funds, upon which the said company agrees to allow interest at the annual rate of 
three per cent, from this date, and on five days’ notice will repay, in current 
funds, the like amount with interest, to the said Caroline Zander or her assigns, 
on return of this certificate, which is assignable only on the books of the Com¬ 
pany.” 
















PROBLEMS AND QUESTIONS 


122 Negotiable Instruments 

Before August 9, 1901, the above certificate was lost or inadvertently de¬ 
stroyed, and the then owner, Caroline Zander, immediately notified the bank 
and thereafter demanded a new certificate or the amount of the deposit. 

Section 1917 of the Code of Civil Procedure of New York provided that in 
case of a lost negotiable instrument the maker could require security against 
loss before being obliged to issue a new instrument. Caroline Zander refused to 
give the security demanded. Whereupon, the bank refused to issue a new 
certificate or to pay her the amount of the deposit. Consequently, Caroline 
Zander is now the plaintiff in an action to compel the bank to issue a new certifi¬ 
cate or pay the amount of the deposit without the aforesaid security. Judgment 
for whom? Reason? 


24. 


“No. 541 Giltner, Neb. 2-28-1906. 

“Pay to the order of M. Wagner $573.80, five hundred seventy three 
80-100 dollars. 

“Gross For Sc a30 per bu. 

“Tare Hayes-Eames Elevator Co. 

“Net lbs. O. E. Bedell. 

“Net iA, 12 10 bus. 57654.” 


The above is what is known as a “grain check.” Bedell was the local 
agent at Giltner, Neb., of the H.-E. Elevator Co., for whom he bought grain. 
He had an understanding with the “ Bank of Bromfield,” located in Giltner, that 
they would pay all such checks that he issued in the purchase of grain, to be 












IN COMMERCIAL LAW 


Negotiable Instruments 123 

charged against the deposits of the elevator company. It was the custom of the 
bank so to do. Is the instrument negotiable? Reason? 


25 - 


“ Suffern-Hunt Mills, 

No. 

“ Branch American Hominy Co. 

“White Corn products. 

Garber Ill., 6-5-1917. 

“Pay to the order of W. E. Lipe $2,337 an d 60-100 dollars, for 1612 

8 bu. white corn at 1.45 bu. 

“To Suffern-Hunt Mills, 

“Decatur, Illinois. 

“John C. Meyer, 

“Agent.” 


It seems that Meyer had a habit of drawing drafts, as above, or ones similar 
thereto, none of which was ever delivered to or indorsed by the payee named, 
and he never intended that any such payee should have any interest in or to any 
of the drafts, or any part thereof. In fact, none of the payees ever knew any¬ 
thing about the drafts. 

In other words, Meyer, while buying grain for his company and issuing 
such drafts in payment therefor, which he was authorized to do, perpetrated a 
fraud upon his company by issuing drafts for grain that he did not buy, payable 
to fictitious payees. 

According to the N. I. L. to whom would such an instrument be payable? 


26. 

What effect have the following upon the negotiable character of an instru¬ 
ment? 

(1) Omission of the date? 














PROBLEMS AND QUESTIONS 


124 Negotiable Instruments 

(2) “Value received” or omission of the words? 


(3) Omission of name of place where drawn or where payable? 


(4) A seal? 


(5) Designation of a particular kind of current money in which payment 
is to be made? 


27- 

(1) If no time for payment is expressed in an instrument, when is it payable? 


(2) Give an example. 


28. 

(1) Define a “promissory note.” 


(2) As in other agreements, is it necessary to show a consideration for a 
promissory note ? Reason ? 

















IN COMMERCIAL LAW 


Negotiable Instruments 125 


29. 


“ Quarry ville, September 2, 1871. 
“Thirty days after death, I promise to pay to Cornelius Carnwright 
fifteen hundred dollars, with interest. 


“Samuel P. Freligh.” 


(1) What kind of instrument is the above? 


(2) Is it negotiable? Reason? 


“$1976 90-100 Brooklyn, February 8th, 1871. 

“One year after my death I hereby direct my executors to pay to 
Joseph Hegeman, his heirs, executors or assigns, the sum of nineteen 
hundred and seventy-six dollars and ninety cents, being the balance 
due him for cash advanced at various times by him to Adrian Hegeman, 
my son, and others, as per statement rendered by him this day, without 
interest. 

“Cornelia W. Hegeman.” 


(1) What kind of instrument is the above? 


(2) Is it negotiable? Reason? 



















126 Negotiable Instruments 

31 - 


PROBLEMS AND QUESTIONS 


“I, Isabella V. Adams, hereby acknowledge my indebtedness to 
Marguerite Gilbert for services rendered by her, for which I promise to 
pay her the sum of Thirty thousand dollars; and in the event of my death 
I hereby authorize and direct the payment of the same out of the funds 
of my estate, 

“January 23rd, 1907. Isabella V. Adams.” 


(1) What kind of instrument is the above? 


(2) When payable? 


(3) Is it negotiable? Reason? 

\ ... 


32. 


“Bridgeton, Mo., Nov. 28, 1902. 
“Good for one thousand dollars, for 10 shares of Kinlock Jockey 
Club Stock surrendered to the undersigned by the owner of said stock 
J. Kessler and for which I am liable. 

“Joseph D. Lucas.” 


(1) What kind of instrument is the above? 


(2) Is it negotiable? Reason? 















IN COMMERCIAL LAW 

33 - 


Negotiable Instruments 127 


834.00 St. Louis, Missouri, Sept. 1, 1905. 

Achhundred u vier und dreisig pay to the order of Mike Lehner Achthun- 
dred vier and und dreisig dollars for value received at the rate of 6% 
per annum. 

“John Roth 
“Mari Roth.” 

“Due: John Hofer.” 


On the back of the instrument were these words: 

“Bezeilt in 19 Mai 1906—60 dol.” 

The English translation of the paper read.s: 

“$834.00 St. Louis, Mo., September 1, 1905. 

“Eight hundred and thirty-four dollars, pay - to. the. order of Mike Lehner 
eight hundred and thirty-four dollars for value received at the rate of six per 
cent per annum. 

“John Roth 
“Mari Roth.” 

“Due: John Hofer.” 

Indorsed on the back: 

“Paid 19 of May, 1906, $60,00”. 

The action in this case was a suit by Lehner against Roth for the unpaid 
balance on the above instrument. 

Is the instrument equivalent to a promissory note? Reason? 


34 - 

On or about May 1, 1915, the defendant, a physician, signed in blank 
thirteen incomplete promissory notes bearing the name of no payee, without any 
date, and without any amount, and left the notes in this incomplete form on his 
desk in his office. The incomplete notes were stolen, all the blank spaces filled 
in, each note calling for the payment of $40, and sold to plaintiff who, without 
any knowledge of the prior circumstances, paid full value for them. May the 









128 Negotiable Instruments PROBLEMS AND QUESTIONS 

plaintiff, the present holder, recover from the defendant, who signed the notes 
in blank? Reason? 


35 - 

It appeared that Conklin, a depositor in The Trust Co. of America, gave 
his bookkeeper a number of checks signed by him in blank, in order to provide 
funds for use in his business. His bookkeeper locked the checks in a drawer of 
the safe. One of Conklin’s employees knew where the key was hidden, abstracted 
a blank check, filled in the blank so that it apparently became a complete instru¬ 
ment payable to bearer for the sum of $200, and cashed it at the bank. The pay¬ 
ment of this check by the bank created an overdraft in Conklin’s account. The 
bank is now suing Conklin to recover the amount of the overdraft. Judgment 
for whom ? Reason ? 


36 - 

The president of a corporation, before going on his vacation, signed some 
checks in blank and left them with his manager. While the manager was out a 
traveling salesman stole the checks, filled in certain amounts ($2,700.95; $395.60; 
















IN COMMERCIAL LAW 


Negotiable Instruments 129 


and $195.15), cashed them at different places, and all were paid, upon presenta¬ 
tion by the bank upon which they were drawn. The corporation then sued the 
bank to recover the total amount charged to its account on the above checks. 
Judgment for whom? Why? 


37 - 

On or about April 29, 1903, plaintiff drew a check upon defendant bank 
for the sum of $500, payable to his own order, and caused the same to be certified 
by the bank. The plaintiff did not use the check until on or about July 29th, 
when he took the check out of his safe, where he had kept it, indorsed it in 
blank, and made out a slip for redepositing it in the bank. He then put the bank 
book, with the check and slip of deposit, in his pocket, and went to the bank; 
but when he arrived at the bank, and presented the bank book to the receiving 
teller, the check was missing. He immediately ordered payment stopped. 

The one, who either by finding or by theft, wrongfully appropriated the 
check to his own use, cashed it at another bank. In due course, it came to the 
defendant bank, on which it was drawn, through the clearing house and was paid. 
May the plaintiff, the drawer of the check, recover the amount from his bank? 
Reason ? 























130 Negotiable Instruments 


PROBLEMS AND QUESTIONS 


38 . 


Signatures of Agent. 


Indicate the parties bound by the following signatures: 

(1) 


“$246.50 Stockton, October 19, 1878. 

“For value received, we promise to pay S. A. Rendell, or order, two 
hundred forty-six and fifty one-hundredths dollars, in one year from 
date, with interest. 

“Otis Harriman, j President. 

R. M. Trevett, I Directors of 
L. Mudgett, [Prospect and Stockton 
W. H. Ginn, J Cheese Company. 


(2) “W. S. Winegar, Agt.” 

(3) W. S. Winegar, Agent of George Brown. 

(4) ,W. S. Winegar, Agent for George Brown. 

(5) George Brown, by W. S. Winegar. 


39 - 

Of what effect is an endorsement of a negotiable instrument by a corporation 
or by an infant? 


Consideration. 

40. 

What are the important differences in the law relating to consideration as 
applied to negotiable instruments and other contracts? 












IN COMMERCIAL LAW 


Negotiable Instruments 131 


41 - 


Negotiation 

Give examples of the following: 

(1) Special Indorsement 


(2) Blank Indorsement 


(3) Restrictive Indorsement 


(4) Qualified Indorsement 


(5) Conditional Indorsement 


42. 

Aaron Leighton has received a check intended for him, payable to Aron 
Leighton. 

What is the simplest indorsement by which the check can be negotiated? 


43 - 


Holder in Due Course 


What constitutes a holder in due course? 


















132 Negotiable Instruments 


PROBLEMS AND QUESTIONS 




Liability of Parties 

44. 

Is presentment for payment necessary to hold the maker of a note or the 
acceptor of a bill of exchange? 


45 - 

Smith wanted to borrow some money from his bank, and induced his friend 
Lang to “go on his note,” which was discounted at the bank in the following form: 


“Jan. 10th, 1909, after date we or either of us promise to pay to 
the order of First State Bank of Kendall, nineteen hundred and no-ioo 
dollars for value received,” etc., and was signed, 

“Chas. W. Smith, 

“H. H. Lang.” 


















IN COMMERCIAL LAW 


Negotiable Instruments 133 


In what capacity is Lang liable on the note? 


46. 

When is a person deemed to be an indorser? 


47 - 


What is the contract or warranty of a general indorser? 































134 Negotiable Instruments 


PROBLEMS AND QUESTIONS 


48. 


What is the nature of the general indorser’s contract for payment? 


49. 

Of the parties whose names appear on bills and notes name below those that 


Primarily Liable 


Secondarily Liable 


are 





















IN COMMERCIAL LAW 


Negotiable Instruments 135 


50 . 

What is the contract or warranty of an indorser “without recourse”? 


5I - 

What gives rise to the necessity of presenting for payment a note to its 
maker or a bill to the acceptor? 
































136 Negotiable Instruments 


PROBLEMS AND QUESTIONS 


52. 

When a negotiable instrument is in the hands of the original payee or any 
one other than a holder in due course , what defenses may the persons primarily 
liable thereon set up against payment? 


53 - 

When a negotiable instrument is in the hands of a holder in due course, 
what defenses may the persons who appear to be primarily liable set up against 
payment? 


54 - 

When a negotiable instrument is in the hands of a holder in due course 
and all steps necessary have been taken to fix the liability of indorsers, what 
defense may a general indorser set up against payment? 



















IN COMMERCIAL LAW 


Negotiable Instruments 137 


55 - 

On or about October 15, 1908, Fred and Mary Brown, being financially 
embarrassed, entered into a transaction with E. E. Cressler, whereby they 
turned over to him certain assets to be administered by him in liquidating their 
indebtedness; for the purpose of misleading and defrauding their creditors, 
certain fictitious notes were executed by them in order to make it appear to their 
creditors that their indebtedness far exceeded their assets, among which was a 
negotiable promissory note for $4,500.00, secured by a mortgage, and payable to 
E. E. Cressler, three years after date. 

E. E. Cressler sold the note for its current value (amount less discount) and 
indorsed it “without recourse,” to C. W. Cressler. The latter had no knowledge 
of the above transactions and was a holder in due course when he bought the 
note, but subsequently learned of the whole affair. 

What right has C. W. Cressler against E. E. Cressler? 


56 . 

In what instances is it necessary to present a bill for acceptance in order to 
fix liability thereon? 





















138 Negotiable Instruments 


PROBLEMS AND QUESTIONS 


57 - 

In what instances is formal protest necessary? 








IN COMMERCIAL LAW 


Agency 139 


AGENCY 

1. 

What is the usual significance of the term “agent”? 


2. 

What is a general agent? 


3 - 

What is a special agent? 


4 - 


As regards third persons, what is the scope of authority of a general agent? 
























140 Agency 


PROBLEMS AND QUESTIONS 


5 - 

What is the scope of authority of a special agent? 


Formation of the relation by agreement. 

6 . 

Inglehart, a general land agent, executed a contract in writing in the name of 
Dodge for the sale of certain land belonging to Dodge, to one Walters, and 
received a portion of the purchase money. (This was a land contract.) Ingle- 
hart’s authority to act for Dodge was an oral authority. 

(1) Is the written contract executed by Inglehart in behalf of his principal, 
Dodge, valid and binding upon Dodge under the Statute of Frauds? Reason? 


(2) When is an agent’s authority required to be in writing under seal? 


(3) What are the exceptions to the general rule under (2) above? 


















IN COMMERCIAL LAW 


Agency 141 


(4) What competency is required to appoint an agent? 


(5) What competency is required to be an agent? 


7 - 


Formation of the relation by ratification. 

(1) State the maxim relating to the legal effect of ratification. 



























i 4 2 Agency PROBLEMS AND QUESTIONS 

(2) May one whose name has been forged to an instrument subsequently 
ratify it and make it his own? 


Formation of the relation by estoppel. 

8 . 

(1) Clark & Co. were engaged in the business of selling musical instruments. 
After some negotiations with one Louis F. Dillman, they sent a piano to the 
latter’s home on trial. Subsequently, one Pressburg, representing Clark & Co., 
was sent to Dillman’s home to obtain Dillman’s signature on a contract note for 
$6 75, which note was duly filled out at the office and handed to Pressburg. 

Pressburg did not present this instrument to Dillman, but accepted $55 in 
cash and notes for $400; keeping the cash, and returning the note he had received 
at the office, upon which he forged the name of Dillman. 

Clark & Co. in some way discovered the fraud. A member of the firm called 
upon Dillman and offered to pay him the $55 and give him a bond of indemnity 
to secure him against the notes he had signed. To which Dillman replied: “No, 
sir, I’ll stand pat on the contract as made by Pressburg.” 

Clark & Co. then sued Dillman to recover the possession of the piano. 
Judgment for whom? Reason? 















IN COMMERCIAL LAW 


Agency 143 


(2) The defendant, a corporation, conducting a department store in the 
city of New York, represented and advertised itself as carrying on the practice of 
dentistry in one of its departments. In point of fact, it seems that the corporation 
was not authorized to engage in dentistry, and the dental department was 
actually owned and conducted by one Mr. Hayes, a licensed dentist. 

However, the plaintiff, seeing the company’s advertisement in a paper and 
relying upon their reputation and representations, made an appointment to 
have her teeth treated, which was done and she paid the bill. 

Thereafter, she sued the company for damages, alleging that the dentist did 
his work so carelessly, negligently and unskillfully that her jaws and gums were 
injured. 

Judgment for whom? Reason? 


Formation of relation by “Necessity.” 

9 * 

One Mrs. Warner went to town shopping. She bought a pair of diamond 
ear-rings priced at $65, and had some jewelry repaired at a cost of $6.50. Both 
items she had charged to her husband. 

When the bill was presented, the husband acknowledged the obligation of 
the repair charge and offered payment ($6.50), but refused to pay the $65 for the 
diamond ear-rings. Whereupon, the jeweler sued him for the amount of both 
items. 

It was not shown by the plaintiff that the defendant had expressly or by 
implication authorized his wife to charge either item. 

(1) Judgment for whom? Reason? 














144 Agency 


PROBLEMS AND QUESTIONS 


(2) What must a plaintiff show in order to recover from a husband for 
merchandise sold or services rendered to the latter’s wife? 


10. 

Frankfort was a way station on the line of the Terre Haute and Indianapolis 
Railroad, distant many miles from the principal offices of the company and from 
the residences of its chief officers. At this station, at one o’clock of the morning 
of July 2, 1881, Thomas Coon, a brakeman in the service of the company, had 
his foot crushed between the wheel of a car of the train on which he was employed 
as a brakeman, and the rail of the track. The conductor of the train requested a 
surgeon, residing at the town of Frankfort, to render the injured man professional 
aid, and informed him that the compaffy would pay him for such services. The 
surgeon rendered the services, the reasonable value of which was estimated to be 
$100. The railroad refused to pay it, and the surgeon brought suit. 

(1) Does the position of railroad conductor carry with it any implied 
authority to employ surgeons for the company? 


(2) For whom should the judgment be in this case, and for what reason? 

















IN COMMERCIAL LAW 


Agency 145 


11. 

Jesse Vawter was in the service of the Louisville, etc., Railway, in the 
capacity of a brakeman on one of its freight trains, and on the morning of June 
11, 1885, while engaged in the discharge of the duties of his service, at Stinesville, 
his leg was broken. Dr. Judah, a competent and skillful surgeon, of Stinesville, 
was called to treat the injured man. He set, dressed, and bandaged the broken 
limb, and gave the unfortunate man such treatment as his injury required. 

After the broken limb had been set and bandaged the conductor sum¬ 
moned, by telegram, one Dr. Smith, who lived at Gosport. Dr. Smith came, 
and, it seems, kept on coming to treat the patient in conjunction with Dr. Judah. 

The railway company paid Dr. Judah, but refused to recognize or pay the 
bill of Dr. Smith. Whereupon Dr. Smith brought suit against the railway 
company to recover the value of his services to Vawter. 

Judgment for whom? Reason? 


12. 

What are the obligations of the Principal to his Agent? 



















146 Agency 


PROBLEMS AND QUESTIONS 


i3* 

What are the obligations of the Agent to his Principal? 


Scope of Particular Powers 
14. 

The defendant (Sargent Mfg. Co.) is a corporation with a manufacturing 
plant at Muskegon, Michigan. It had a branch house in New York for the 
purpose of marketing the goods manufactured in the Muskegon factory. Mr. 
Hughson was in charge of this branch house. The stock of goods carried, and 
which Mr. Hughson was authorized to sell, consisted of folding chairs, revolving 
book cases, hospital supplies, and invalid goods, for sick people. The company 
did not deal in brass beds, springs, mattresses, pillows, or parlor furniture, 
such as armchairs. It had none of these goods in its branch house in New York. 

The plaintiff (J. Fred Cowan) was a manufacturer of bedroom, parlor and 
library furniture. Hughson visited Cowan’s place of business and ordered 
furniture, beds, springs, mattresses, etc., in the name of the Sargent Mfg. Co., 
which furniture was delivered direct to customers to whom he had previously 
sold it. He dealt with other stores in the same way, and always paid by check, 
signed “Sargent Manufacturing Company, Mr. Hughson, Manager.” 

One bill, however, from Cowan, amounting to $190.05, was not paid and 
Cowan sued the Sargent Mfg. Co. 

Judgment for whom? Reason? 














IN COMMERCIAL LAW 


Agency 147 


15- 

In January, 1874, the plaintiffs, who resided in Concord, N. H., and were 
there engaged in business as merchant tailors, started a branch house in Mont¬ 
pelier. One A. S. Currier, it seems, was their general agent in charge of the 
Montpelier branch. The firm kept a deposit in a bank at Montpelier for the 
purpose of paying current expenses, for which purpose Currier had authority to 
draw checks. The agreed price for Currier’s service was $18 per week. 

Soon after Currier commenced work, he and his family fell ill, and he 
employed the defendant, who was a physician, to give the desired medical 
attendance. 

Currier solicited the defendant to take his pay out of the store, and to have 
a new suit of clothes, and told him that the goods he took should apply in pay¬ 
ment of his bill for medical attendance. The defendant took the goods, relying on 
what Currier told him, supposing that Currier had authority to dispose of the 
goods in that way, and supposing that he was getting pay for his account against 
Currier; otherwise he would not have taken the goods. 

When the members of the firm at Concord learned of this, they brought suit 
against the physician to recover the price of the merchandise. Judgment for 
whom ? Reason ? 


16. 

In 1887 the defendants were engaged in constructing a spur track for the 
Lake Shore Railroad Company, at Caledonia, and had let the contract to do the 
work to other parties. One McQuade was employed by defendants to superin¬ 
tend the work on the tracks. He was called their walking boss. It was his duty 
to see that the subcontractors did their work according to their contract with 
defendants, and that they had a sufficient number of men on the work to fulfil 
the contract and carry out the instructions of the engineer. 

McQuade brought a number of laborers to plaintiff (who kept a boarding¬ 
house at Caledonia), requested him to furnish them board, and promised to see 
that he was paid therefor. 








148 Agency 


PROBLEMS AND QUESTIONS 


Defendants defend the action brought against them for the amount of the 
board on the ground that McQuade had no authority to pledge their credit for 
the board of laborers, and that in contracting for the board he acted in his 
individual capacity, not as their agent. 

Judgment for whom? Reason? 


17 - 


f Plaintiff 
Principal\ Marston, 


Seller 


Boston, Mass. 




Subject of 
Sale 

Cod-fish 
/ 


(defendant 
Buyer] Pickert, 

[La Crosse, Wis. 


. Agent- 


{ Traveling Salesman ' 

of . 

Plaintiff 1 

Residence: Chicago 


The salesman, agent of plaintiff, called on defendant at La Crosse, Wis., 
and sold to the latter codfish at the agreed price of $78.25 with “delivery at 
La Crosse in good merchantable condition guaranteed.” The evidence was 
undisputed that the fish were in good condition when shipped from Boston, and 
absolutely worthless upon arrival at La Crosse. 

(1) When has an agent implied or apparent authority to warrant or guar¬ 
antee? 















IN COMMERCIAL LAW 


Agency 149 

(2) Is the custom or usage of trade at the place of the seller or the buyer the 
controlling factor? 


(3) Applying the above principles, in whose favor should the decision be in 
this problem? 


18. 

The complaint alleged that the defendant (Hitchcock), on the seventh day 
of July, 1897, acting by his agents and brokers, Anderson and Mead (real estate 
brokers), agreed in writing to convey to her, free from incumbrances, certain 
lands in consideration of $ 1,100. 

The defendant denied specifically that Anderson and Mead had any authority 
to bind him upon a contract to sell the land. 

In order to prove the necessary authority of Anderson and Mead to act for 
defendant, the plaintiff offered in evidence a certain letter as follows: 

Ansonia, Conn., November 23, 1896. 
Messrs. Anderson and Mead, Bridgeport, Conn. 

Gentlemen:—I have a building lot on William St., E. D., that I would like 
to sell if I can do so at any advantage. It is located next to the residence of S. W. 
Hubbell, 268 Wm. St. As I am not a resident of Bpt. I do not know the value of 
said lot, but could you not look at the lot and give me an idea of its value and if 
possible find a purchaser for same. 

Yours truly, 


M. C. Hitchcock. 













150 Agency 


PROBLEMS AND QUESTIONS 


Is the above letter sufficient to authorize the real estate brokers, expressly 
or by implication, to bind Mr. Hitchcock on a contract to sell the land ? Reason ? 


19. 

The plaintiffs were wholesale grocery merchants in the city of Nashville, 
and had in their employ, as a traveling salesman or drummer, one Gibson. 
Gibson’s duty, under his employment, was to travel through the country, take 
orders from retail merchants for goods, and collect the bills as they became due. 

For plaintiffs, Gibson sold a bill of goods, amounting to $228.90, to J. J. 
Meadows, of Warren County. On October 12, 1891, before Meadows’ Bill be¬ 
came due, Gibson proposed to Meadows that, if he would then pay the bill, he 
would be allowed a discount of two per cent. To this Meadows agreed, and gave 
to Gibson his check for $224.39, payable to the order of plaintiffs. 

Gibson indorsed plaintiffs’ name on the back of the check, adding to the 
indorsement the words “by Gibson,” and presented the check to the bank on 
which it was drawn, where it was paid to him by the cashier. 

The plaintiffs, learning of this and that Gibson had collected other money 
due them and failed to account for it, ordered him in, and discharged him. 
Gibson absconded. The plaintiff then brought suit against the bank that cashed 
the check to recover the amount thereof. 

Judgment for whom? Reason? 















IN COMMERCIAL LAW 


Agency 151 


20. 

What is the principle upon which an implied authority may be derived from 
an express authority? 


21. 

Plaintiff was engaged in business as a retail dealer in clothing, in the city of 
Muskegon, Mich. Three doors from him on the same street the defendant was 
engaged in business as a retail dealer in boots and shoes. Defendant had bought 
from plaintiff sundry merchandise, of the value of $88.75, which had been charged 
to defendant’s account. 

Plaintiff had a store clerk by the name of Barney Ash. One day Barney 
entered the store of the defendant with a bill for $20, properly made out on the 
bill-head of plaintiff. He told the defendant that his boss (the plaintiff) would 
like to get some money on his account, then amounting to $88.75. Whereupon 
defendant paid the $20 to Barney in cash, and kept the bill. Barney put the 
money in his pocket, forgot to give it to his employer, and later disappeared. 

The plaintiff never learned anything about this until he tried to collect the 
$88.75 that he thought was due from defendant. Defendant refused to pay. 
Plaintiff brought suit. For what amount should the plaintiff receive judgment? 
Reason ? 


22. 

It seems that one Starbird owned a certain tract of land in Canada; that he 
employed one Rockwell to act as his agent to sell the land; that Rockwell did 
sell the land to one Haskell, upon representations that “the land was of the value 
of twelve hundred dollars, contained a large amount of timber, and was adjacent 
to a flourishing village.” The representations were false, upon discovery of 
which Haskell brought suit against Starbird to recover damages for the fraud 
perpetrated upon him. 














152 Agency PROBLEMS AND QUESTIONS 

(i) Upon which representations would an action for fraud and deceit be 
based ? Reason ? 


(2) What kind of agent was Rockwell, general or special? 


(3) Assuming that all the elements of legal fraud are present so far as the 
agent is concerned, would the plaintiff be entitled to recover from the principal? 
Reason ? 


Good Faith Required of Agent. 

23 - 

In January, 1857, the defendant was the owner of a number of shares of the 
Oswego River Starch Company, and the agent of the company in the city of New 
York, for disposing of its manufacture. In an interview at that date between 
the defendant and the plaintiff in New York, after a glowing account by the de¬ 
fendant of the business of the concern, and of which the plaintiff had previously 
no knowledge whatever, the plaintiff expressed a desire to purchase some one or 
two thousand dollars worth of the stock, if any was to be obtained in the market, 
at a price not exceeding $150 per share. 

The defendant thereupon undertook to buy some if it could be procured. 
Accordingly, on January 31, 1857, he wrote to the plaintiff stating that he knew 
where he could obtain the stock at $150 per share, and asking plaintiff if he 














IN COMMERCIAL LAW 


Agency 153 

would like it. Further statements were made concerning the high character and 
value of the investment. Whereupon, the plaintiff wrote to the defendant 
(February 5), and asked defendant to buy ten shares for him at $150 per share. 

The defendant did not, in fact, purchase any stock from anyone, but caused 
ten shares of his own stock to be transferred to the plaintiff, and received from 
plaintiff $1,500 in payment therefor. Plaintiff did not know that the stock he 
bought was actually owned by defendant. 

Sequel: The following June the Company went into the hands of a receiver, 
the plaintiff learned all the facts concerning the stock transfer and sued the 
defendant to recover the $1,500. 

(1) What was the relationship between the plaintiff and the defendant in 
the stock sale? 


(2) Judgment for whom? Reason? 


24. 

One Canned owned certain real estate that was for sale. One Smith, a real 
estate broker, after being promised a commission by a prospective purchaser to 
represent him in buying the property, went to Canned and told her that he 
would represent her in the sale of her property upon her agreement to pay him 
one-half of ad the property sold for over and above $80,000. She agreed. 

Smith sold the property to his prospective purchaser for $92,000, and 
accepted $5,000 as his commission from the seder (Canned). He also accepted a 
commission from the purchaser. 

The purchaser demanded that Smith account to her for the commission 
received from Canned ($5,000), on the ground that Smith was her agent. They 
effected a compromise under which Smith paid $2,600 of his commission to the 
purchaser. 











PROBLEMS AND QUESTIONS 


154 Agency 

Canned, having learned of the dual capacity in which Smith acted, brought 
suit to recover all the $5,000 that she paid him. Judgment for whom? Reason? 


25 - 

Eddy et al ., promised Montross that if he would find a purchaser for certain 
lands at $90,000 they would pay him for his services. Montross at that time was 
representing a prospective purchaser, to whom subsequently he introduced Eddy, 
and who purchased the lands of Eddy at $90,000, 

The purchaser paid Montross $500 as compensation. Eddy paid Montross 
$250. Montross broughtsuit against Eddy et al. for additional compensation 
amounting to $250. 

(1) What is the essential difference between the situation in this case and 
that in problem 24? 


(2) Judgment for whom? Reason? 


















IN COMMERCIAL LAW 


Partnership 155 


PARTNERSHIP. 

Based Upon the Uniform Partnership Act 

I. 

Define partnership. 


2. 


What rules apply in determining whether a partnership exists ? 























156 Partnership 


PROBLEMS AND QUESTIONS 


3 - 

What is the controlling test of the existence of a partnership as between the 
parties? 


4 - 

Plaintiff (A. W. Kent) leased a theater in Havana, Cuba, for the exhibition 
of motion pictures, at a rental of $ 1,800 per month, and deposited $7,100 with the 
lessor as a guaranty for the fulfillment of his obligations under the lease. 

Plaintiff then entered into an agreement with defendant (Universal Film 
Mfg. Co.) for supplying films to the theater. By virtue of this agreement, the 
above lease was to belong to them in equal shares, the defendant assuming 50% of 
the plaintiff’s obligations thereunder. Defendant was to supply the films and 
bear the advertising expense. The receipts were to be disposed of as follows: 

At the end of each month $1,800 was to be set aside for rent, and other 
expenses of operation (except advertising) were to be deducted. Of that which 
remained plaintiff was to receive 25% and defendant 75%. One Fernando Poli 
was employed as manager of the theater under agreements by which he was to 
receive from plaintiff and defendant, for his services, under separate assignments, 
10% of their respective shares of the profits. 

(1) Were plaintiff and defendant partners? Reason? 















IN COMMERCIAL LAW 


Partnership 157 


(2) Was Poll a partner? Reason? 


5 - 

How is intent determined? 


6 . 


“500.00 August 11,. 1919. 

“Three months after date I promise to pay to the order of A. Rems five 
hundred dollars at ill West 28th St., New York City. Value received. 

“C. & R. Mfg. Co. 

“Morris Rudolph.” 


It seems that one Cohen was a member of the “C. & R. Mfg. Co.” Suit 
was brought on the note, naming Mr. Cohen individually and others “as 
partners.” It seems that the “others” did not care to be considered partners, 
and denied the relationship. Consequently, the burden was upon the plaintiff, 
Rems, to prove that the partnership relation existed between the defendants. 

Upon the trial, in order to prove the partnership relation, as well as the 
obligation, the above note was introduced in evidence. Furthermore, the 
attorney for the plaintiff, Mr. Weinrib, took the stand and testified that he knew 
Morris Rudolph, and that he knew the signature affixed to the note to be the 
signature of Morris Rudolph; moreover, testified Mr. Weinrib, he knew the 
defendant Cohen and that in the course of a conversation he had with Cohen 
upon a previous occasion Cohen stated that he was member of the firm of C. & R. 














158 Partnership PROBLEMS AND QUESTIONS 

Mfg. Co., and that the firm consisted of Morris Rudolph, himself (Cohen), and 
Becky Roffis. 

(i) May the plaintiff recover against Cohen? Reason? 


(2) May the plaintiff recover against the other persons named as partners? 
Reasons ? 


7 - 

Plaintiff and defendant orally agreed upon all the terms of a partnership, 
intending later to memorialize their understanding in a suitable writing. The 
plaintiff put in his stipulated share of the capital, and for 14 weeks the partner¬ 
ship business was conducted upon the basis of the oral agreement. The defendant 
then refusing to sign partnership articles, the plaintiff demanded the return of his 
investment, which was refused, whereupon the plaintiff brought an action to 
recover the amount of his investment. The defendant defended upon the ground 
that the action was not proper in that it attempted to recover all of the plaintiff’s 
investment, whereas, if the plaintiff did not want to continue, in the business 
as it then existed he should apply for a partnership accounting. Judgment for 
whom ? Reason ? 
















IN COMMERCIAL LAW 


Partnership 159 


8 . 

M. H. Bekkedal & Son are a partnership located at Westby, Wisconsin, 
engaged in the business of buying, sorting, handling, and shipping of tobacco. 
E. Rosenwald & Brother are a partnership having its principal office and place of 
business in the city of New York, and engaged in selling, handling, and mer¬ 
chandising of tobacco. On March 6, 1917, the two partnerships entered into a 
contract by the terms of which the Bekkedals (party of the second part) were to 
buy tobacco of 1916 crop, raised in the state of Wisconsin in “joint account” 
with the party of the first part (the Rosenwalds) and attend to packing and 
handling of the same. The Rosenwalds agreed to attend to the marketing of the 
tobacco so purchased and packed, and apply all the net proceeds of any sales made 
to the credit of the joint account, as kept on their books. 

Advances for the purchase of said tobacco and expenses of same were to be 
made as follows: Rosenwalds, 60%; Bekkedals, 40%. The net profits or net 
losses were to be shared according to the same percentages respectively. Orders 
that the Rosenwalds secured for the tobacco were to be sent to the Bekkedals, 
and shipments were to be made by the latter direct to the purchasers. 

Was a partnership relation created by the contract of the two partnerships? 
Reasons ? 


9 - 

Plaintiff was a dealer in real estate. Defendant was a grocer, principally, 
and somewhat inclined to dealing in real estate. They orally agreed to purchase 
a certain tract of land contributing equally to the cost and agreeing to share the 
profit if any of a resale. 

(1) Was the agreement valid? Reason? 















160 Partnership 


PROBLEMS AND QUESTIONS 


(2) If valid, would it create a partnership relation? Reason? 


10. 

Two separate and distinct pieces of real property were listed for sale with two 
different real estate firms in the same city. According to a common practice 
among real estate agents, those two firms and a third firm entered into an oral 
agreement whereby in the event of the sale of the properties by any one of the 
three the commissions were to be split and divided equally among the three firms. 

(1) Does such an agreement create a partnership of the three firms? 
Reasons ? 


(2) Does the statute of frauds apply to the agreement? Reason? 




















IN COMMERCIAL LAW 


Partnership 161 


ii. 

A partnership firm became badly involved in debt. A new partnership 
was formed to take over the business of the old partnership. The new partner¬ 
ship entered into an agreement with the creditors of the old partnership under the 
terms of which the business was to be conducted under the supervision of a 
managing committee therein designated, and the net earnings were to be applied 
on the claims of such creditors. 

Did the creditors, by virtue of this agreement, become partners in the new 
partnership? Reason? 


12 . 

On March 28, 1917, the parties in this case executed a contract of which the 
following is a part: 

“Louis Blaustein, trading as the American Oil Company, main .office, 
Baltimore, Maryland, does hereby lease unto Clarence H. Oldfield and Walter 
F. Oldfield, trading as Oldfield Automobile Shop, one metal tank for storage of 
gasoline,” etc., etc. 

At the same time the following supplemental agreement was executed: 

“In consideration of gasoline tank and pump being leased by Louis Blau¬ 
stein, trading as the American Oil Company, to Clarence H. Oldfield and Walter 
E. Oldfield, trading as Oldfield Automobile Shop, as per separate lease and 
gasoline agreement signed this day, it is also understood that Clarence H. Oldfield 
and Walter F. Oldfield, trading as Oldfield Automobile Shop, is to purchase their 
exclusive lubricating oil requirements from the American Oil Company during the 
period covered by the lease and at the American Oil Company’s regular public 
garage prices, whatever they may be at the times of deliveries.” 

Both of the agreements were thus signed: 

“ American Oil Company, 

“By.L. Blaustein. 

“Oldfield Automobile Shop, 

“C. H. Oldfield. 

“W. F. Oldfield.” 









PROBLEMS AND QUESTIONS 


162 Partnership 

On September 21, 1917, Clarence H. Oldfield abandoned the business, owing 
a balance of $352.97 by reason of deliveries under the above contracts. When 
Clarence abandoned the business the Oldfield Automobile Shop went out of 
business, as then constituted, because Clarence was and had been all the while 
the sole proprietor of it and his brother, Walter, only an employee. However, 
it seems that Clarence had no individual property of his own and Walter did. 
Consequently, Blaustein brought suit against Walter F. Oldfield to recover from 
him individually as a former partner in the Oldfield Automobile Shop the balance 
due ($352.97) under the above contracts. It was conclusively proved on trial 
of the action that Walter was not and never had been in fact a partner of his 
brother Clarence in the Oldfield Automobile Shop. 

Judgment for whom? Reason? 


13. 

May a partnership acquire and dispose of real property in the partnership 
name? 


14. 

One George I. Whitney and others were partners, carrying on business under 
the firm name of Whitney and Fickeisen, trustees. For the purpose of securing 
funds with which to carry on their business, Whitney borrowed $5,000 on an 
accommodation note, which was discounted for the firm, the proceeds being 
received by the firm and applied to its use. Thereafter Whitney died. 

One of the indorsers of the note, who was obliged to pay it, sued the surviving 
partners individually. The trial court gave judgment for the defendants, and 
stated its reasons as follows: 











IN COMMERCIAL LAW Partnership 163 

(a) “It nowhere appears in the statement that defendants had expressly 
assumed any joint liability.” 


(b) “The note was not made by the partnership, and there is no averment 
that it ever authorized the making thereof.” 


(c) “There are no averments that the note came to the partnership other¬ 
wise than in due course.” 


Questions: 

(1) Should the judgment stand or should it be reversed? 


(2) If you think the judgment should be reversed, answer each of the 
above reasons given by the lower court for its decision in favor of defendants. 




















l6zj. Partnership 


PROBLEMS AND QUESTIONS 


15 - 

In what case does the doctrine of “notice or knowledge” as between partners 
not apply? 


16. 

E. H. Parrish & Co. (a partnership) was engaged in the construction of a 
brick building. One L. O. Pulley, an experienced man, was employed to set the 
stone in the walls. Before beginning to hoist the stone, it became necessary to 
adjust a derrick. This fell to the lot of Mr. Pulley. ’ 

One Singleton, a member of the firm of Parrish & Co., was present at the 
time, and was attempting to be of some assistance. It appears that, by reason 
of the negligence of Singleton and two servants working with him, in the process 
of adjusting the derrick, the derrick fell backwards and struck Pulley, knocking 
him to the ground, a distance of about sixteen feet, breaking his arm, dislocating 
his shoulder, and causing other injuries. 

Pulley brought suit against the partnership for damages. Are the other 
partners liable? Reason? 


17 - 

One Friedlander, Faber, and Potosky were engaged in business as partners 
under the firm name of A. Friedlander & Co. It seems that they employed one 














IN COMMERCIAL LAW 


Partnership 165 

Seligman in some capacity, who rendered services for which he was not paid. 
Seligman brought suit against one member of the firm, Lriedlander. 

Thereafter, and before the action was finally determined, Lriedlander died. 
Seligman then proceeded against Friedlander’s estate. 

(1) To what extent are partners liable for the debts of the partnership? 


(2) How are the partners liable, jointly, severally, or jointly and severally? 


(3) In any event, whether or not Seligman should have proceeded first 
against the surviving partners or was right in proceeding immediately against the 
deceased partner’s estate, would the latter ultimately be available for the payment 
of firm debts existing at the time of the death of the partner? 





















166 Partnership 


PROBLEMS AND QUESTIONS 


18. 

What is the liability of a new partner admitted into an existing partnership? 


19. 


What are the rights and duties of partners as “between themselves”? 
























IN COMMERCIAL LAW 


Partnership 167 


20. 


What are the property rights of a partner? 































168 Partnership 


PROBLEMS AND QUESTIONS 


21 . 

Into what two classes is specific partnership property divided? 


22 . 

May a partner, without the knowledge and consent of the other partners, 
assign his own right in specific partnership property with which the firm conducts 
business ? 


23 - 

May a partner, without the knowledge and consent of the other partners, 
convey his right to participate in the management? 


24. 

May a partner, without the knowledge and consent of the other partners, 
convey his interest in the partnership? 


















IN COMMERCIAL LAW 


Partnership 169 


25 - 

What is the difference between the dissolution and the termination of a 
partnership? 


26. 

May a partner sell his partnership interest to an outsider without dissolving 
the partnership? Explain. 
























170 Insurance 


PROBLEMS AND QUESTIONS 


INSURANCE 

1. 

The defendant (Insurance Co.), on the 5th day of April, 1894, issued to 
plaintiff, J ohn M. Graham, its policy of insurance, wherein, for a premium of $15, 
it agreed to indemnify against loss by fire “his stock of material for the manu¬ 
facture of cotton and woolen hosiery, raw wrought, and in process thereof, while 
contained in the two-story brick and shingle roof building situated within the 
walls of the South Carolina Penitentiary, at Columbia, S. C. Any loss that 
may be ascertained and proved due the assured shall be payable to G. H. Tilton, 
as his interest may appear.” 

Another clause in the policy read: 

“This entire policy, unless otherwise provided by agreement endorsed hereon 
or added hereto, shall be void ... if the interest of the insured be other than 
unconditional and sole ownership.” 

The actual owner of the property insured was the aforesaid G. H. Tilton, 
which fact, it appeared, was known to the insurance company. Mr. Graham was 
superintendent of the factory, for which he received a stipulated compensation 
from Mr. Tilton. The amount of the policy was $ 1,000. The insurance company 
received and accepted the premium. 

On the 25th day of April, 1894, a fire occurred and destroyed about $4,400 
worth of the property. The insurance company refused to pay, and the insured 
(Mr. Graham) brought suit. 

(1) Did plaintiff have an “insurable interest”? Explain. 












IN COMMERCIAL LAW 


Insurance 171 

(2) Will the clause providing that the policy should be void if the plaintiff 
were not the sole owner prevent plaintiff’s recovery? Reason? 


(3) How much, if anything, is plaintiff entitled to recover from this de¬ 
fendant? 


2. 

One Max Gertner took out insurance on “automobile machinery and 
accessories.” The policy described the place where the property insured was 
located as follows: “All while contained in the building, extensions and additions 
thereto, situate No. 1135 East Tremont Avenue, N. Y. C.” 

The plaintiff at the time of the issuing of the policy as well as at the time of 
the fire was a dealer in automobile machinery and accessories. The undisputed 
evidence was that when the policy was issued these accessories and various parts 
of automobile machinery were kept both in the building fronting on East Tremont 
Avenue and in a barn-like frame building which was on a lot adjoining and 
fronting on One Hundred and Seventy-ninth Street. The latter had doors 
fronting on the street, which had always been kept closed during the plaintiff’s 
occupancy, and the only access thereto was through an entrance door in the rear 
of the building which was reached by going through the Tremont avenue building 
by way of the yard and alley between the rears of both buildings. 

Not more than a week after the issuance of the policy one McGuire, a special 
agent of the insurance company, visited the premises, saw one of the employees 
of the plaintiff at work in the so-called rear building, and made some notes in a 
book that he had. 












172 Insurance 


PROBLEMS AND QUESTIONS 


Subsequently a fire occurred by reason of which the plaintiff suffered loss. 
The insurance company refused to pay anything to the insured on the ground 
that the property covered by the insurance was not located as represented in the 
policy—the barn-like structure in the rear being neither an “extension” nor an 
“addition” to the main building. 

May the plaintiff recover on the policy? Reason? 


3 - 

Check (v) those items in the following list that are usually covered by fire 
insurance, whether or not provided for in the policy; mark with an X the items 
not covered unless specifically mentioned in the policy: 

(1) Fire caused by carelessness or negligence of the insured. 

(2) Damage caused by smoke from a lighted lamp. 

(3) The pharring of woodwork and furniture by the extraordinary and 
excessive heat of a defective furnace. 

(4) Damage to the interior of a boiler resulting from overheating and 
absence of water. 

(5) Fire in a theater, caused by the excessive heating of its walls by fire 
outside. 

(6) Fire caused by explosion. 

(7) Damage from explosion without a resulting fire. 

(8) Fire caused by earthquake. 

(9) Fire caused by the accidental ignition of soot in a chimney. 

(10) Fire caused by lightning. 

(11) Damage caused by lightning without combustion. 

(12) Damage caused by the effort made to prevent the destruction of 
property by fire, as by water or demolishing part of a building. 

(13) Loss caused by theft during removal of personal property to a place of 
safety. 

(14) Damage caused by falling of walls a day after the fire. 









IN COMMERCIAL LAW 


Insurance 173 


4 - 

A clause commonly found in fire insurance policies reads something like this: 

“This entire policy, unless otherwise provided by agreement indorsed 
hereon or added hereto, shp.ll be void ... if a building herein described, 
whether intended for occupancy by owner or tenant, be or become vacant or 
unoccupied and so remain for ten days.” 

(1) When is a dwelling house in a state of occupation? 


(2) Plaintiff had a home in the country, which he occupied several months 
in the year. In November he returned to his city residence, to remain for the 
winter, leaving, however, in his summer home all the furniture thereto belonging, 
and the summer clothing of himself and family. He also left the house in charge 
of. his farmer, who occupied the farm house, and members of whose family visited 
and aired the dwelling once a week, and the plaintiff and his wife also visited 
it once a fortnight. During the absence of plaintiff and his family the house and 
its contents were destroyed by fire. May plaintiff recover under a policy con¬ 
taining the above occupancy clause? Reason? 


(3) Plaintiff and her family, a week or ten days before the fire, left on a 
visit, leaving no one in the house. During this time the husband of the plaintiff 
came back and stayed in the house over night on two occasions, and he and 
another man stayed there the night of the fire, and the plaintiff expected to 
return the next day. May plaintiff recover insurance? 















174 Insurance 


PROBLEMS AND QUESTIONS 


(4) Plaintiff slept in her daughter’s house, adjoining the premises insured, 
but her furniture and clothing were in her own house, and she spent the day 
there. Was the house unoccupied? 


(5) Plaintiff and family left home for 12 days, to visit a sick daughter, and 
engaged a person to go to the house daily to look after the house and feed the 
stock. 

Does the occupancy clause apply to this situation ? 


5 - 

What is the difference between fire insurance and life insurance in the 
following matters? 

(1) Insurable interest. 


(2) Amount of recovery on policy in case of loss or death. 


6 . 

One Daniel E. Fane was a railway postal clerk. He had a certificate of 
insurance containing the following clause: 

“If the holder of this certificate shall receive bodily injuries during the 
continuance of this certificate through external, violent and accidental means,” 
.etc., he shall be entitled to recover. 














IN COMMERCIAL LAW 


Insurance 17 5 

On the 20th day of October, 1916, at Binghamton, while in the performance 
of his duties, he was engaged in piling heavy mail bags on a stack seven or eight 
feet high. While doing that work in the usual way he sutained a rupture. 

Is he entitled to recover under the insurance certificate? Reason? 


7 - 

The defendant (Travelers Insurance Co.) by its policy of insurance in 
August, 1903, undertook the liability to pay the principal sum mentioned 
therein for loss of life of the insured. The policy contained a clause which read, 
in part, as follows: “Nor shall this insurance cover . . . death . . . resulting 
directly or indirectly, wholly or partly, from . . . war or riot.” 

The insured, Alfred G. Vanderbilt, on the 7th of May, 1915, while the 
policy of insurance was in full force and effect, was traveling as a passenger and 
was then on board the British steamer Lusitania, then bound from New York to 
Liverpool, Eng. In accordance with instructions from the Imperial German 
government, the vessel was fired upon, by a German submarine and sunk at a 
point off the coast of Ireland. As a result thereof, Alfred G. Vanderbilt lost his 
life by drowning. 

The plaintiff, in suing on the policy, contended that since the transaction 
violated the common usages and acceptances of principles of enlightened nations, 
termed the laws of war, the death of the insured could not be ascribed to the 
usual consequences of war, and, therefore, was not within the meaning of the 
excepted condition of the policy. 

Judgment for whom? Reason? 















176 Insurance 


PROBLEMS AND QUESTIONS 


8 . 

Mr. Jones has the following insurance on his residence: 

Company X, a policy for $4,000; 

Company Y, a policy for $8,000; 

Company Z, a policy for $12,000. 

The house is damaged by fire to the amount of $12,000. How much may 
Mr. Jones recover from each company? 










IN COMMERCIAL LAW 


Innkeepers 177 


INNKEEPERS 

1. 

Check (v) in the following list those who are common-law innkeepers; mark 
with an X those who are not: 

(1) One who entertains strangers occasionally, receiving compensation. 

(2) Keeper of a tavern. 

(3) Keeper of a hotel—American plan. 

(4) Keeper of a hotel—European plan. 

(5) Keeper of a restaurant. 

(6) Keeper of a coffee-house. 

(7) Keeper of a boarding house. 

(8) Keeper of a lodging house, who lets rooms to guests by the day or week. 


2. 

Plaintiff was a guest at defendant’s hotel, and at the end of his stay “checked 
out,” paid his bill and left the hotel, leaving there his baggage, which consisted 
of a suit case and its contents. Within an hour plaintiff sent to the hotel for his 
baggage, but it could not be found. May plaintiff recover damages from the 
defendant (hotel proprietor) for the loss of his baggage? Reason? 


3 - 

The plaintiff was met at the depot by a porter of a hotel, who wore a cap 
with the name of the hotel on it, and he was shown by this porter to the omnibus 
which was to take him to the hotel. He delivered to the porter a check for his 
baggage. The porter, in the presence of the plaintiff, gave the check to another 
man. Plaintiff never received his baggage, and sued the hotel proprietor# for 
damages on account of the loss thereof. May he recover. Reason? 










178 Innkeepers 


PROBLEMS AND QUESTIONS 


4 - 

One Mr. Holohan, a traveling salesman, arrived at Nashville, Tenn., on 
the morning of September 1, 1901. He had with him two suit cases. These 
grips were turned over at the depot to the porter of the Tulane Hotel, as Mr. 
Holohan intended to stop at that hotel. 

However, he did not stop at the Tulane Hotel, but, after breakfasting at the 
Terminal Station Hotel, he met a friend of his, went home with him, and did not 
stop or stay at the Tulane as its guest while on that trip. 

On the afternoon of the day of his arrival Mr. Holohan went to the Tulane 
to secure his grips, but only one of them could be found. Mr. Holohan brought 
suit against the hotel for damages for the loss of the missing grip. 

(1) What is the liability of an innkeeper for the baggage of a guest? 


(2) What was the relation between Mr. Holohan and the hotel, and what 
was the nature of the liability attached to the latter? 

















IN COMMERCIAL LAW 


Innkeepers 179 

(3) What was the relation between Mr. Holohan and the porter? 


(4) Is Mr. Holohan entitled to recover from the hotel? Reason? 


(5) Is Mr. Holohan entitled to recover from the porter? Reason? 


5 * 

The plaintiff, Elcox and Larter, were manufacturing jewelers, doing business 
in Newark, N. J. Larter left home for a tour through several Western cities, 
with some $6,300 worth of jewelry, which was contained in two traveling bags 
or satchels, like those usually carried by travelers; one a large leather bag, con¬ 
taining about $5,300 worth of solid gold jewelry, and the other a small satchel, 
containing about $1,000 worth of jewelry. The smaller bag was not locked and 
had no key. 

On arriving at a hotel in Chicago, he registered his name and asked for a 
room, but one could not be assigned to him for three or four hours. During the 
time he was waiting he placed his traveling-bags in the coat-room and received 
a check therefor. Later, when a room was assigned to him, his bags were sent 
to the room, where he went and remained for some time, then came down to 
dinner. Before going into the dining-room, he gave the key of his room to the 
bell-boy who had conducted him to the room and carried the bags, and directed 














180 Innkeepers 


PROBLEMS AND QUESTIONS 


him to go up and bring them down and put them in the coat-room again; and on 
coming out from dinner he received from the boy the coat-room check for them. 

Of course, the sequel to this story is that when Larter called at the coat-room 
for his bags the next morning only the small one could be found, and from that 
the jewelry had been stolen. 

At the top of the page of the hotel register and on the door of the room 
assigned to Larter were notices to the effect that the proprietor would not be 
responsible for the loss of “money, jewels and valuable property” unless placed 
in the safe in the office. Also on the door of the room-was a copy of an Illinois 
statute to the same effect. 

Plaintiffs had two witnesses ready to testify that the bell-boy admitted to 
them that he stole the jewelry. 

On the basis of the foregoing facts the plaintiffs brought an action against 
the hotel proprietor to recover for the loss of their valuables. 

(i) What is the intended purpose of a coat-room in a hotel? 


(2) Was Larter guilty of negligence in leaving the bags in the coat-room and 
not putting the jewelry in the safe provided by the hotel? 


(3) However, if the plaintiff could show that he was not negligent and that 
the loss occurred “by the hand or through the negligence of the landlord (hotel 
proprietor), or by a clerk or servant employed by him in such hotel or inn,” could 
he nevertheless recover? 













IN COMMERCIAL LAW 


Innkeepers 181 

(4) The court refused to receive the testimony of the two witnesses to the 
effect that the bell-boy had admitted to them that he stole the jewelry. In your 
opinion, was this ruling right or wrong? Explain. 


(5) Who loses in this case? 


6 . 

Plaintiff registered at the Terminal Hotel in St. Louis. Notices were 
posted, as required by statute, that the hotel had a safe for the safe-keeping of 
money and jewelry, and a Missouri statute protected innkeepers from loss of such 
valuables unless deposited in the safe. 

Before going into the adjacent restaurant to get his supper, plaintiff handed 
a box to the clerk and asked the clerk to keep it for him (plaintiff) until after 
supper. The box contained a gold-filled locket and an ivory miniature, both 
alleged to be of the value of $211. But plaintiff did not inform the clerk that the 
box contained valuables, neither did he ask the clerk to put the box in the safe. 

After supper, plaintiff forgot all about the locket until about midnight 
and after he had retired. When he remembered leaving it with the clerk, he rang 
for a bell-boy and sent him to get the locket, at the same time showing the boy 
another locket like it. This was the first time any employee about the hotel 
knew what was in the box the plaintiff had left with the clerk. 

When the bell-boy asked for the locket, the clerk with whom it had been 
left had gone off watch and the night clerk who had come on, could not find it. 
However, about three o’clock in the morning this clerk did find it and, after 
opening the box and seeing the locket inside, entrusted it to the bell-boy to take 













182 Innkeepers 


PROBLEMS AND QUESTIONS 


to plaintiff’s room. The boy laid the box on a balustrade in the hotel until he 
filled an order for liquor which some guest had given, and when he returned it 
was gone. 

May plaintiff recover from the hotel? Reason? 


7 - 

Plaintiff registered at the “Metropolitan Hotel” in New York. On retiring 
to his room for the night, he locked the door of his room, and placed his watch 
and money under his pillow, both of which were stolen during the night. 

The money amounted to $50, and was, of course, for personal use in traveling; 
the watch was of gold, with a chain, seal and key attached, and was valued at 
$ 353 - 

The hotel had properly complied with the statute by providing a safe for 
the safe-keeping of “money, jewels or ornaments,” and posting notices. 

May the plaintiff recover for the loss of his property? Reason? 


8. 

Plaintiff and her husband had been guests at the Hotel Biltmore, New York 
City. They were about to leave the hotel with the intention of returning in a few 
days. Upon being informed by the assistant manager of the hotel that their 















IN COMMERCIAL LAW 


Innkeepers 183 

trunks would be taken care of during her absence, a trunk in which among other 
articles was placed a diamond pendant valued at more than $1,000 was delivered 
to defendant for storage. 

Upon her return the trunks were sent to her room and upon opening them 
she discovered that the contents had been tampered with and that the pendant 
was missing. 

'(i) Was the hotel company an insurer of the trunk and its contents? 
Reason ? 


(2) Is the hotel company liable for the loss of the pendant? Reason? 


9 - 

The plaintiff visited a restaurant and handed to her escort her pocketbook 
which had in it a sum of money and a diamond ring. He put it in his overcoat 
pocket and checked the coat in the coat room and when later, on request, the 
coat was returned to him the pocketbook was gone. 

Is the restaurant proprietor liable for the loss of the pocketbook? Reason? 





















184 Common Carriers 


PROBLEMS AND QUESTIONS ' 


COMMON CARRIERS 

1. 

Check (v) in the following list those that are common carriers; mark with 
an X those that are not: 


Stagecoach proprietor 

Omnibus proprietor 

Railroad company 

Street railway company 

Truckman 

Wagoner 

Teamster 

Express company 


Steamship company 
Sleeping car company 
Oil pipe line 
Telegraph company 
Telephone company 
Cable company 
Wireless company 


2 . 

A train containing several carloads of whiskey was overtaken by the Johns¬ 
town flood, but was not swept away. The train was left upon the track, and the 
cars were uninjured, but owing to the destruction of the track both ahead and in 
the rear of the train, the cars could not be moved to a place of safety, but had to 
remain where they were until the tracks were repaired. 

While thus waiting for the tracks to be repaired, thieves, in open daylight 
and in the presence of the train men who made no resistance, broke open the cars 
and seized some of the whiskey. A volunteer guard of unarmed citizens interfered 
and protected the train during the night and part of the following day, and then 
destroyed the remainder of the whiskey to prevent it from falling into the hands 
of the dangerous element in the community. The train men made no efforts to 
protect the train, but as soon as the thieves began to break open the car with 
axes, they turned their backs and left the neighborhood. 

(1) What is the liability of a common carrier for goods that it undertakes to 
transport? 








IN COMMERCIAL LAW 


Common Carriers 185 


(2) Was the cargo destroyed by 

(a) Act of God ? 

(b) Public enemy? 

(c) The nature of the cargo itself? 

(d) The negligence of the shipper? 

(e) Act of the public authority? 

(3) Was the carrier guilty of negligence? 


(4) May a carrier contract away its liability for its own negligence or the 
negligence of its servants ? 


(5) May the plaintiff, owner of the whiskey, recover against the railroad 
company for the loss of the cargo? 


3 - 

Plaintiff (E. Fox), on February 22, 1881, made a special contract with de¬ 
fendant (Boston and Maine Railroad), by the terms of which the latter was to 
transport a car-load of apples from Haverhill, Mass., to Portland, Me., and 
deliver it to the Maine Central Railroad, a connecting railroad, in time to be 
transported by the Maine Central to Bangor by a freight train which left Portland 
early in the morning of February 23; the weather was mild on the 22d and 23d 
days of February, in contemplation of which the shipment was made, and the 
railroad agent was apprised of this fact. 

The defendant negligently delayed to deliver the apples to the Maine 
Central at the agreed time,by reason of which they “were caught in cold weather 
in course of transportation from Portland to Bangor, arriving at the latter 
place in a frozen condition.” 











186 Common Carriers PROBLEMS AND QUESTIONS 

May plaintiff recover from the defendant for the loss occasioned by the 
freezing? Reason? 


4 - 

Plaintiff shipped by way of American Express Company “a package con¬ 
taining three dozen ten spring skirts, three dozen sixteen spring skirts, and three 
dozen twenty spring skirts.” The package was wrapped in paper and covered 
with sacking. The wrapping was not water-proof. 

The package was transferred from the car to the express wagon and from 
the express wagon to plaintiff’s store during a rain storm, in consequence of which 
the goods were “water-soaked, rusted and utterly spoiled.” 

May plaintiff recover from the Express company for the loss of the goods? 
Reason ? 


5 - 

Plaintiff delivered to the American Express Company a package to be taken 
from Decatur to Cairo, Ill. The package contained a wreath, partially made of 
glass, but there were no marks 1 on the package to indicate the fragile nature of its 
contents, neither did plaintiff tell the agent about the fragile nature of its con¬ 
tents. When the package arrived at Cairo, the glass was broken. 















IN COMMERCIAL LAW 


Common Carriers 187 
May plaintiff recover from the express company? Reason? 


6 . 

Is a carrier of passengers liable as an insurer of the passengers carried? 


7 - 

To what extent is a carrier of passengers liable for the safety of passengers? 


8 . 

(a) Do you have to prove negligence on the part of the carrier in order to 
hold it liable for the loss of goods? 


(b) For injury to passengers? 




















188 Common Carriers 


PROBLEMS AND QUESTIONS 


9 - 

Does the difference between the liability a carrier for goods and for passen¬ 
gers indicate that the law values human life less than it does property? Explain. 


io. 

Assuming that the carrier has no knowledge of the contents of trunks, suit 
cases, etc., check (v) those items in the following list that constitute baggage; 
mark with an X the items that are not baggage: 


(1) Jewelry for personal attire. 

(2) Watch. 

(3) Surgical instruments of an army 
surgeon. 

(4) Valuable laces carried by a for¬ 
eign woman of rank. 

(5) One revolver. 

(6) An opera glass. 

(7) Bedding of a poor man moving 
with his family. 

(8) Books and magazines for read¬ 
ing. 

(9) Harness maker’s tools. 

(10) A carpet. 

(11) A rifle, revolver, two gold chains, 
two gold rings, and a silver lead 
pencil. 


(12) Jewelry bought for presents. 

(13) Stock of jewelry carried by a 
salesman. 

(14) A feather-bed not intended for 
use on the journey. 

(15) Lawyers papers and bank notes 
to be used by him in conducting 
a case. 

(16) Stage properties, costumes, and 
advertising matters of a theat¬ 
rical company. 

(17) Samples of merchandise. 

(18) A trunk not accompanied by a 
passenger. 

(19) Money not intended for personal 
use while traveling. 











IN COMMERCIAL LAW 


Common Carriers 189 


11. 

About nine o’clock on the night of November 28, 1919, plaintiff purchased 
transportation and Pullman tickets from Chicago to Akron, Ohio; on his way 
from the ticket window to the train, he placed his bag, overcoat and portfolio in 
the hands of a station porter. While plaintiff was having his ticket examined, 
outside the car entrance, the porter entered the Pullman car with the bag, over¬ 
coat and portfolio, returned empty-handed, received his tip and left. The plaintiff 
entered the car within two minutes of the time that the porter was in there, and 
found only his overcoat and portfolio; the bag was never found. 

Is the Pullman Company liable to the plaintiff for the value of the bag and 
its contents? Reason? 


12. 

The plaintiff shipped a trunk on January 30, 1918, from Pelham Manor, 
N. Y., to Vincentown, N. J., via the Adams Express Company. The trunk was 
not delivered to the consignee. Both parties concluded it was lost. Thereafter 
the defendant (Express Company) paid the plaintiff the sum of fifty dollars in 
“full release and satisfaction of any and all claims account of shipping” of the 
trunk in question. 

Shortly after this settlement was made the trunk was found. The plaintiff 
demanded its return which defendant (in possession of the trunk) refused unless 
plaintiff paid back the fifty dollars he received in settlement of his claim. Plaintiff 
refused to pay back the fifty dollars and brought suit to recover possession of 
his trunk. Judgment for whom? Reason? 














190 Common Carriers 


PROBLEMS AND QUESTIONS 


13 - 

Defendant was engaged in furnishing private limousines, together with 
chauffeurs, for hire. Its business was not solicited on the public streets or places. 
The hiring of its cars was arranged either by calls at its place of business or by 
telephone. 

Plaintiff was engaged to be married. The father of the bride-to-be ordered 
limousines from the defendant to take the bride, bridegroom, and attendants to 
the church, thence to the Waldorf-Astoria for luncheon, and there to wait for the 
bridal couple and take them to the Pennsylvania Station in time for the four 
ti’clock train for Atlantic City. 

Bags of the bride and groom were placed in the front part of one car with the 
chauffeur. When the couple came'out of the hotel, two of the bags were missing 
and could not be accounted for by the chauffeur. 

(1) Was there any contract relation between the bridal couple and the 
Service Company supplying the cars? 


(2) Was the Service Company a common carrier? 
















IN COMMERCIAL LAW Common Carriers 191 

(3) May the bride and groom recover from the Service Company for the 
loss of the bags and their contents? 












PROBLEMS AND QUESTIONS IN COMMERCIAL LAW Fixtures 192 


FIXTURES 

Check (v) those of the following fixtures that may be removed by a tenant: 

(1) Baker’s ovens. 

(2) Saltpans. 

(3) Carding-machines. 

(4) Cider mills and furnaces. 

(5) Steam engines. 

(6) Soap-boilers, vats, and copper stills. 

(7) Mill-stones. 

(8) Barns standing on a foundation of brick-work set into the ground. 

(9) Cupboards and shelves. 

(10) Bells and bell-pulls. 

(11) Gas-fixtures. 

(12) Electric fixtures. 

(13) Portable hot-air furnace. 

(14) Grates. 

(15) Window-blinds and curtains. 
































